Tax 8: Transfer Duty and VAT

Question 1

Who pays transfer duty?

Answer 1

person who acquires property (BUYER)

Question 2

When is transfer duty paid?

Answer 2

within 6 months of date of acquisition

Question 3

What is seen as property for transfer duty purposes?

Answer 3

immovable prop in RSA

*incl. share or member’s interest in a residential prop company or in a holding company

Question 4

When is transfer duty NOT paid?

Answer 4

if transaction is subject to VAT

Question 5

What are examples of residential property?

Answer 5

dwelling house, holiday home, apartment or similar

improved/unimproved land zoned for residential use

Question 6

What is not seen as residential property for transfer duty purposes?

Answer 6

apartment complex, hotel, guest house of 5+ units

fixed prop of a vendor forming part of an enterprise

Question 7

What is a Residential Property Company?

Answer 7

Holds residential property where fair market value is > 50% of total MV of all assets!

Question 8

What is seen as a “transaction” for transfer duty purposes?

Answer 8

agreement to sell, waive, donate, cede, exchange or dispose of

• • property
• • share/member’s interest in residential prop
• • substitution/addition of a beneficiary with a right to property in a trust

Question 9

How is property valued i.t.o. transfer duty?

Answer 9

amount paid
declared value of prop (if nothing paid)
portion paid before cancellation of transaction

Question 10

What is the “value” of the property if two properties are simply exchanged?

Answer 10

greater of the declared values of the two props

Question 11

The _____ is usually 5% of the consideration paid and is included in value of the property.

Answer 11

commission

Question 12

What is excluded from the consideration (price)?

Answer 12

transfer duty and registration fees

Question 13

If there is no physical transaction, what is considered the date of acquisition?

Answer 13

when buyer became entitled to property

Question 14

What is the penalty if the transfer duty isn’t paid within 6 months?

Answer 14

10% p.a. for each completed month

Question 15

Who are exempt from transfer duty?

Answer 15

• PBO’s
• Surviving spouse - prop acquired from deceased estate
• heirs

Question 16

Transfer duty is _____ between joint owners of a property.

Answer 16

split

Question 17

VAT is _____ tax collected from the ____ user.

Answer 17

indirect, end

Question 18

Output tax =

Answer 18

VAT charged by the vendor

Question 19

Input tax =

Answer 19

VAT incurred/paid by vendor – claim back from SARS

Question 20

If output tax is more than the input tax, the difference should be paid to _____ by the _____.

Answer 20

SARS, vendor

Question 21

If output tax is less than the input tax, the difference should be paid to ____ from SARS.

Answer 21

the vendor, SARS

Question 22

We recognise _________ supplies and ________ supplies for VAT.

Answer 22

taxable

exempt

Question 23

Taxable supplies are taxed at ____ % or ______ %

Answer 23

14 or 0

Question 24

Exempt supplies are not taxed. What does this reflect?

Answer 24

No input or output tax available.

Question 25

VAT is charged at ____ %, but claimed at ______% for zero rated supplies.

Answer 25

0, 14

Question 26

When can a business voluntarily register for VAT?

Answer 26

when turnover is likely to be > R50 000 in a 12 month period

commercial rental > R60 000 in 12 month period

Question 27

When is a business compelled to register for VAT?

Answer 27

when taxable supplies is likely to be > R1 mill in 12 month period