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Don't miss out on your transfer duty Vat exemption - here's how to keep the money in your bank

by , 18 May 2015
Over the last few years, SARS lost millions of Rands in transfer duty, thanks to fraudulent claims for the Transfer Duty exemption. SARS issued this Transfer Duty exemption because the seller declared he was a Vat vendor. So since Vat was payable on the transaction, there was no transfer duty. The Vat vendor walked away smiling - his Vat bill had shrunk.

But when the SARS auditors finally got around to auditing the transaction, it found that no Vat (and indeed no Transfer Duty) had been paid by this dubious vendor!

So, to protect the state coffers, SARS put in some checks and measures. These ensure it issues the exemption certificates promptly AND the tax due is paid over in time.  

Let's review the legal basics governing this transaction.

SARS issues TWO MILLION Vat review letters a year

That's the letter that pops up immediately after your submit your Vat returns. The same letter that has seen people around the country wake up to thinned out bank balances.

Now get this: There are only 700 000 vendors registered with SARS…

You do the math.

Every vendor should receive this letter at least once a year.

Here's how to protect your bank account before you do…

If it's not fixed property AND you're not a Vat vendor, you don't qualify for the exemption

Transfer Duty Law says you're exempt from paying transfer duty if the sale of fixed property is subject to Vat.

Fixed property is:
-    Land together with any improvements;
-    Any unit in terms of sectional title;
-    A share in a share-block company;
-    A time-sharing interest; and
-    Any rights to land, sectional title units, timeshare or share block.

But, the sale of a property is only subject to Vat if you sell it in the course of an enterprise – for example, the sale of a property by a Vat-registered property developer.  

Get your transfer duty exemption certificate the first time!

So, where Vat is payable, SARS issues a transfer duty exemption certificate. BUT only if SARS is happy the Vat payable on the transaction has been, or will be paid.

In some cases, you (as the seller) might have to provide security if the Vat hasn't been paid yet.

This is usually the case if you have a history of non-compliance.

Let's look at how to get your Transfer Duty Exemption certificate.


Do your Vat refund in ten simple steps

Calculate your Vat, submit your Vat return form and get your refund back from SARS without any delays when you follow this ten-step action plan.

Get your hands on this ten step action plan now to get your Vat refund when its due.


Get your transfer duty exemption Certificate in two easy steps

Step #1: Apply for exemption using the TD5 form

Apply, using the TD5 form.

All rransfer duty applications and forms must be submitted electronically via eFiling.

Step #2: SARS checks your records

When SARS receives your TD5 application, it will scrutinise your records. If you haven't proven yourself compliant with Vat laws, SARS is going to make life difficult for you...

It will notify the transferring attorneys that you won't get the transfer duty exemption certificate unless you do one of the following:

•    Resolve all outstanding tax obligations – yes, pay up; or,
•    Provide security for the Vat payment portion of the property transaction. Generally, the security amount is the same as the Vat amount due. So you might as well pay up! Or,
•    Instruct the transferring attorney (conveyancer) to provide an undertaking to pay the Vat directly to SARS from the proceeds of the sale of the property. In this case, SARS will issue a form (TD-VAT) to the transferring attorneys, who'll have to complete it and submit it back to SARS. You must pay the Vat to SARS within five working days of the property's registration with the Deeds office.

The good news: SARS says it won't stall if you comply

In its letter (AS-TD-L03 Application for Transfer Duty Exemption in terms of Section 9(15) of the Transfer Duty Act, No.40 of 1949 (Transfer Duty Act) and Request for Security), SARS says that once you take action to comply, it will provide your transfer duty exemption certificate without delay!

You should get written confirmation of this from SARS, too. And if for some reason you're declined even after you've taken steps to rectify your non-compliance, then SARS must give you written reasons for the decline.

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Don't miss out on your transfer duty Vat exemption - here's how to keep the money in your bank
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