Tax 8: Transfer Duty and VAT Flashcards
Who pays transfer duty?
person who acquires property (BUYER)
When is transfer duty paid?
within 6 months of date of acquisition
What is seen as property for transfer duty purposes?
immovable prop in RSA
*incl. share or member’s interest in a residential prop company or in a holding company
When is transfer duty NOT paid?
if transaction is subject to VAT
What are examples of residential property?
dwelling house, holiday home, apartment or similar
improved/unimproved land zoned for residential use
What is not seen as residential property for transfer duty purposes?
apartment complex, hotel, guest house of 5+ units
fixed prop of a vendor forming part of an enterprise
What is a Residential Property Company?
Holds residential property where fair market value is > 50% of total MV of all assets!
What is seen as a “transaction” for transfer duty purposes?
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
How is property valued i.t.o. transfer duty?
amount paid
declared value of prop (if nothing paid)
portion paid before cancellation of transaction
What is the “value” of the property if two properties are simply exchanged?
greater of the declared values of the two props
The _____ is usually 5% of the consideration paid and is included in value of the property.
commission
What is excluded from the consideration (price)?
transfer duty and registration fees
If there is no physical transaction, what is considered the date of acquisition?
when buyer became entitled to property
What is the penalty if the transfer duty isn’t paid within 6 months?
10% p.a. for each completed month
Who are exempt from transfer duty?
- PBO’s
- Surviving spouse - prop acquired from deceased estate
- heirs
Transfer duty is _____ between joint owners of a property.
split
VAT is _____ tax collected from the ____ user.
indirect, end
Output tax =
VAT charged by the vendor
Input tax =
VAT incurred/paid by vendor – claim back from SARS
If output tax is more than the input tax, the difference should be paid to _____ by the _____.
SARS, vendor
If output tax is less than the input tax, the difference should be paid to ____ from SARS.
the vendor, SARS
We recognise _________ supplies and ________ supplies for VAT.
taxable
exempt
Taxable supplies are taxed at ____ % or ______ %
14 or 0
Exempt supplies are not taxed. What does this reflect?
No input or output tax available.
VAT is charged at ____ %, but claimed at ______% for zero rated supplies.
0, 14
When can a business voluntarily register for VAT?
when turnover is likely to be > R50 000 in a 12 month period
commercial rental > R60 000 in 12 month period
When is a business compelled to register for VAT?
when taxable supplies is likely to be > R1 mill in 12 month period
