Transfer Duty Act amendments

Most of you are probably aware that through amendments to the Transfer Duty Act, the Receiver of Revenue (SARS) is using the transfer channel as a mechanism of catching up with tax defaulters. Buyers and sellers are now required to complete a declaration, including their tax number, which states that all their tax affairs are in order.

Although SARS does not have the power to stop or refuse the issue of a transfer duty receipt due to tax default on the part of either the buyer of seller, there could be lengthy delays should tax default be discovered. This period can be used by SARS to enter into consultation with the defaulting party and should adequate arrangements not be forthcoming, SARS can consider legally attaching the proceeds of the sale, or the property itself, depending on whether the defaulting party is the purchaser or the seller, once transfer has taken place.

Although transfer cannot be withheld, sellers need some protection against extensive delays caused by the purchaser should he drag his heels in complying with SARS. Furthermore, it would be equally as frustrating if the financial institution was to withdraw their bond approval should tax default be uncovered.

Most sale agreements include clauses stipulating dates or time periods within which certain procedures must be complied with. For example, the purchaser will be given a date by which he must provide his deposit, as well as time to be approved for his bond, usually 2 to 3 weeks. Unfortunately, as no such time limitations may be imposed on the Receiver of Revenue, it is strongly recommended the estate agent protects the seller by including in all their sale agreements a clause forcing the purchaser to remedy any tax default, should it arise.