Proposed draft legislation



ESTATE AGENTS TO BE LIABLE FOR NON-RESIDENT SELLERS' CGT? -- RAWSON If proposed draft legislation is enacted and brought into operation, then anyone who buys a property from a seller who is non-resident for R1 million or more will be responsible for making sure that the seller pays the capital gains tax on the sale. Institute of Estate Agents president Bill Rawson says that the estate agency and conveyancer involved in the sale would be responsible for making sure that the purchaser was made aware of this obligation and, if they failed to do so, then they would be held personally liable for payment of the seller's tax. "The proposal," says Rawson, "is that when a non-resident property owner sells a property for R1 million or more, the purchaser would have to see to it that an amount of between 5 percent and 10 percent of the purchase price was withheld from the proceeds and paid directly to the SA Revenue Services. If the purchaser is resident in South Africa the money must be paid to SARS within ten days. If he himself is also non-resident, then it must be paid over within twenty days. "If he failed to pay it over to SARS within the required period of time, then he would become personally liable to pay it himself, unless he did not know - or it was unreasonable to expect him to have known - that the seller was non-resident." Rawson says that it would be the estate agency's and the conveyancer's responsibility to make sure that the purchaser knows that the seller is non-resident. The draft proposal provides that both the estate agent and conveyancer must inform the buyer, in writing, that the seller is non-resident. If either or both of them failed to do so, then they would become jointly and severally liable with the buyer for payment of the tax. They would, however, be entitled to recover the money from the seller afterwards. "This is quite a responsibility," says Rawson. "It suggests that SARS is having problems collecting CGT from non-residents, and so it wants the private sector - purchasers, estate agencies and attorneys - to share the burden." Rawson emphasises that at this stage the draft law is still only a proposal. "It has not been finalised by Parliament," he says, "and it would be some time before it became law - if, indeed, it ever did become law. At this stage, the estate agency industry should take note of the proposals as something to watch out for in the future, but it does not need to act upon them until such time - if ever - as they become the law of the land."