Parliament passes the Revenue Laws Amendment Bill



One of the major loopholes in the tax net came a step closer to being closed last week, when Parliament passed the Revenue Laws Amendment Bill, which will make transfer duty payable when residential property is sold through a company or a close corporation, or passed on to another beneficiary via a trust. So far as is known, the legislation has not yet been signed by the President or been gazetted, so the date on which it will actually come into operation is not yet clear. Once it is in effect, several thousand property owners will be affected by the new law, as it will give a broader definition to the term "residential property". Once the law is in operation, shares or member's interest in any company, CC or trust which owns residential property making up more than 50 percent of its assets will themselves be deemed to be property, and transfer of shares or interest in such "residential property companies" will be subject to transfer duty. A residential property will be defined as any dwelling, house, holiday home, apartment, or similar abode, as well as any improved or unimproved land zoned for residential use. The definition will exclude apartment complexes, hotels, guesthouses or similar structures of more than five units (so long as they are rented out by five or more people unconnected with the owner) or any fixed property forming part of an enterprise taxed with VAT. Bill Rawson, national president of the Institute of Estate Agents, said that the new legislation had been expected for some time and its advent had been confirmed by the Minister of Finance in his last budget speech. Article: 24 February 2003 Rodney Hayter The Property Professional On-line Edition 61 email: hayter@icon.co.za