Heather Briggs of Shepstone & Wylie Attorneys.
Buyers of property must ensure their tax affairs are in order or they could face serious transfer delays.
Heather Briggs of Shepstone & Wylie Attorneys says that recently SARS has started thorough investigations into the tax affairs of people who want to buy property, when assessing documents for the purpose of transfer duty.
“Any issues such as unpaid PAYE, SITE, income tax or outstanding tax or VAT returns could delay the issue of the transfer duty receipt and in turn delay the registration of the transfer concerned,” says Briggs.
Depending on the nature of the query, the property transfer may be delayed for some time. Briggs says that parties could protect themselves by including a clause in the sale agreement whereby the other party warrants that their tax affairs are up to date.
“If that party’s tax affairs are queried by SARS, they will be in breach of the agreement. The aggrieved party could then proceed to cancel the sale agreement or, in the case of the seller, invoke the ‘mora’ clause in the agreement whereby the defaulting buyer is charged interest on the price in lieu of the delay,” Briggs says.
Every transfer of immovable property requires a transfer duty receipt from SARS, to be registered in the deeds office. Even if the transaction concerned is exempt from the payment of transfer duty, the necessary documents are still sent to SARS to obtain an exemption receipt. The deeds office will not register a transfer unless the documents are accompanied by the necessary receipt from SARS, either proving that the transfer duty has been paid or that the transaction has been exempt from the payment of transfer duty.
Briggs says if SARS queries the seller’s or the buyer’s tax affairs, SARS will ask the conveyancing attorney who submitted the documents to them, to inform the relevant party to contact SARS directly. For reasons of privacy, SARS will only discuss the exact nature of the problem with the individual concerned or someone who has a general power of attorney to deal with their affairs. Only once the outstanding issue has been attended to will SARS issue the transfer duty receipt.
