Consumers who are active in the property industry could limit their liability to the South African Revenue Services (SARS) by utilising the services of an estate agent. Crazy? No, it could be fact, as long as one draws upon the services of a reputable estate agency….

It is strongly suggested that prospective purchasers ensure that they make use of the services of reputable estate agents in affiliation with reputable conveyancing attorneys as new legislation, namely Section 35A of the Income Tax Act, will come into operation on 1 September 2007.

This new provision deals with the withholding of tax when one buys fixed property in South Africa, from a non-resident, for a price that exceeds R2 000 000. Yes, under certain circumstances, the purchaser will be obliged to withhold a portion of the purchase price from the seller on registration of transfer.

The withheld portion is to be paid directly to SARS, who will treat the payment as an advance in respect of the seller’s liability for taxes in South Africa. The withheld amount is to be paid to SARS within 14 days of registration of transfer, or if the purchaser is also a non-resident, within 28 days of such registration.

Depending on the legal status of the seller, different percentages are to be withheld and paid to SARS. If the seller is a natural person, 5% of the purchase price is to be withheld, while it is 7,5% in the case of a company or close corporation , and 10% in the case of a Trust.

If the purchaser knows, or reasonably ought to have known, that the seller is a non-resident, and he fails to withhold the amount required, the purchaser becomes personally liable to pay the amount to SARS on the due date.

The estate agent and the conveyancing attorney have an obligation to notify the purchaser of these stipulations, but it should be noted that if they know, or ought to have known, that the seller is a non-resident, such estate agents and conveyancing attorneys will be jointly and severally liable for the tax payable, limited to an amount equal to that which they have earned on the particular transaction.

FICA already imposes an obligation on the conveyancer and estate agent to “know their client”, but the provisions of this new legislation take things a little further. One should now also determine whether a seller is, for tax purposes, a resident of South African or not.

Things can get really complicated when one considers the fact that there are certain circumstances under which SARS may deem a legal entity to be a non-resident in order to avoid double taxation.

So what should the estate agent be doing to protect the purchaser and to avoid personal liability in terms of Section 35A? Attorneys Van Niekerk Groenewoud & Van Zyl Incorporated of Tygervalley suggests that:

1.the seller should warrant his residency status in the sale of the agreement, and
2.the conveyancers should be irrevocably authorized and instructed to withhold the required percentage of tax from the proceeds of the sale and pay these to SARS within fourteen days of registration of transfer if:
    2.1 the seller is indeed a non-resident, or
    2.2 if the seller has warranted that he is a resident, but the estate agent or convey ancers have cause to believe or suspect that the seller is a non-resident.

In addition to the many other good reasons, Section 35A of the Income Tax Act creates yet another good cause for the purchaser to use only experienced and reputable estate agents and conveyancing attorneys, as the involvement of such professionals significantly reduces the purchaser’s responsibility and liability.

Maintaining the ever-increasing demand for professionalism in our working environment is both difficult and demanding. At AÏDA we are prepared to live up to these challenges and I will sign off by quoting Maxwell Maltz: “We find no real satisfaction or happiness in life without obstacles to conquer and goals to achieve.”

1.

A credit agreement is reckless if, at the time that the agreement was made/concluded, or at the time when the amount approved in terms of the agreement is increased:
2.

the credit provider failed to conduct an assessment thus taking reason able steps to assess:
     2.1 the consumer’s general understanding and appreciation of the risks and costs of the proposed credit, and of the rights and obligations of a consumer under a credit agreement;
     2.2 the consumer’s debt re-payment history as a consumer under credit agreements;
     2.3 existing financial means, prospects and obligations and whether there is a reasonable basis to conclude that any commercial purpose may prove to be successful,

irrespective of what the outcome of such assessment might have concluded at the time; or

AIDA

     2.4 the credit provider, having conducted the said assessment as required, entered into the credit agreement with the consumer despite the fact that the preponderance of information available to the credit provider indicated that:
               2.4.1 the consumer did not generally understand or appreciate the consumer’s risks, costs or obligations under the proposed credit agreement;
or
               2.4.2 entering into that credit agreement would make the consumer over-indebted. A person is over-indebted if, at the time that a determination is made, he/she is or will be unable to satisfy in a timely manner all the obligations under all the credit agreements, to which he/she is a party, having regard to the consumer’s financial means, prospects and obligations and probable propensity to satisfy in a timely manner all the obligations under all the credit agreements, to which the consumer is a party, as indicated by the consumer’s history of debt repayment.
3.To determine whether a credit agreement is reckless or not, the criteria set out above will be applied as they existed at the time the agreement was made. The value of a credit facility is the credit limited at that time under that credit facility.
4.Depending on the circumstances, if a court declares that a credit agreement is reckless, the court may make an order:
     4.1 setting aside all or part of the consumer’s rights and obligations under that agreement;
or
     4.2 suspending the force and effect of that credit agreement.

Theart Mey & Ramabulana Inc.
Telephone: (011) 476 9642 • E-mail: natanyab@theartmey.co.za

The highly regarded Nedbank Property Professional awards recently took place at the luxurious Arabella Western Cape Hotel & Spa.

This annually held event is in its seventh year of distinguishing and rewarding values of performance and leadership within South African real estate.

The judging procedure is carried out by an esteemed panel of five Trustees who are themselves recognised in their respected fields, ensuring a fair and equitable process.

The awards range from ‘The Young Lions’, a recognition of the leaders of the future, specifically an individual embodied with imagination and energy needed to propel the industry towards new ideas and attitudes. Jan Davel, CEO of AÏDA National Franchises is amongst the ten individuals recognised for this achievement.

To that of the prestigious “Movers & Shakers” award, a recognition of those individuals in the industry who have well proved their worth as skilled and proactive leaders. Neville McIntyre, CEO of Jigsaw Holdings is one of seven selected in this pivotal role.

Another of the awards is the Property Association regional finalists. The sixteen Finalists are chosen nationwide, criteria for the award being that of highest sales turnover and highest established service satisfaction record. Amongst the finalists are Lenie Senekal of AÏDA Tzaneen and Hannes van Niekerk of AÏDA Pretoria East.

These achievements carry great honour as the PA Property Professional Club awards are the only independently judged accolades of its kind.

With pride and inspiration we congratulate those in our midst who have stepped up and achieved these pinnacles of success.