IEASA National - News

Have you got your TD7 form yet?   Article Date :30 May 2005 Form for reporting details of transactions where company- or CC- or trust-owned residential properties are sold. In the February edition of the IEA News WCape, when we discussed tax matters, we drew your attention to the fact that estate agencies are now required by law to report to the SA Revenue Service details of transactions where company- or CC- or trust-owned residential properties are sold, so that SARS can make sure that transfer duty is paid. We noted that SARS had not yet issued the necessary report form. Well, it’s now available. It's form TD7, and we recommend that you obtain one and keep it as a master copy. As you will recall, until December 2002 people could buy and sell property without paying transfer duty if the property was already registered in the name of a company, a CC or a trust, and they kept it in that entity's name. As there was no change of registered ownership in the Deeds Office, there was no transfer duty. Since December 2002, however, such entities have been defined as "residential property companies", and transfer duty has been payable on the transfer of ownership of the company, rather than of the property itself. Evidently SARS has been having some difficulty keeping track of such transactions, and so now estate agents are required to inform SARS of each such transaction which they negotiate, so that SARS can follow up on the payment of transfer duty. So, from now on, whenever you sell a property owned by a "residential property company" (or trust) by means of selling the company (or trust) itself, you must fill in a TD7 form, and send it to SARS. You must do so not later than six months after the sale was concluded. Fortunately, it's a simple and user-friendly one-page form. The details which you need to fill in are: the transferor's (i.e, seller's) name and phone number, the transferee's (i.e. buyer's) name and phone number, the name and registration number of the company, and details of the property. You also have to provide the following information about yourself as the estate agency: the name of your firm, the name of the individual agent involved in the sale, the amount of commission which you will be paid for the sale, and your firm's VAT registration number. This suggests to us that SARS will cross-check against your firm's VAT and tax payments, and your agent's income tax, to make sure that tax is paid on the commission. The form must be signed by the estate agent (presumably the principal or manager of the firm), and the firm must keep a copy on file for five years. As usual, there are penalties for non-compliance: prosecution and, if convicted, a fine or imprisonment. What if the client asks you not to submit the form? We recommend that you tell the client very clearly that you have to do so, and that if the client gives you any reason to think that he/she is going to try and wriggle out of paying the transfer duty, then you are obliged to report him/her to the Financial Intelligence Centre on suspicion of tax evasion. You can download the form from the SARS website: www.sars.gov.za For specialised advice, contact your local SARS office or a conveyancer. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE