Transfer Duty is levied on the value of any property which is acquired by way of a sale, donation or otherwise.

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1 Transfer Duty & VAT What is Transfer Duty? Transfer Duty is levied on the value of any property which is acquired by way of a sale, donation or otherwise. Property includes: Land and Fixtures; Real rights in land (such as usufructs), but excluding rights under mortgage bonds or leases; Rights to minerals or rights to mine for minerals; A share or interest in a residential property company (i.e. a company or CC where the only asset or majority asset is a residential house); A contingent right to residential property or share or member s interest in a residential property company held by a discretionary trust where the acquisition of the right is- in consequence of an agreement for consideration in relation to property held by that trust; accompanied by a charge in the debt or security structure of the trust; or accompanied by a charge in the trust s trustees. A share in a share block company. In terms of which act is Act is Transfer Duty levied? Transfer Duty is levied in terms of the Transfer Duty Act No. 40 of 1949 who must pay the Transfer Duty? Transfer Duty is payable by the person acquiring the property. When is Transfer Duty payable? Transfer Duty is payable within six (6) months of the date of acquisition of the property, failing which interest will be charged. What is the date of acquisition? The date of acquisition is: where the property was acquired by way of a transaction, the date of acquisition will be the date on which the transaction was entered into; where the property was acquired other than by way of a transaction (i.e. inheritance), the date of acquisition will be the date on which the person who has acquired the property became entitled thereto. To whom is Transfer Duty payable? Transfer Duty is payable to SARS, electronically only. How must Transfer Duty be submitted and paid? All transfer duty declarations and payments must be submitted electronically utilizing the SARS efiling website: What are the turnaround times for Transfer Duty applications to be processed? The turnaround times for transfer duty is 5 to 10 working days from the date that the application appears on the SARS Administration site as awaiting authorization. What are the current Transfer Duty rates? The present Transfer Duty rates are applicable to properties acquired under purchase agreements concluded on or after 23 February 2011, and apply to all persons (including Companies, Close Corporations and Trusts): 0% on the consideration or value below R ; 3% on the consideration or value exceeding R , but not exceeding R ;

2 R plus 5% on the consideration or value exceeding R , but not exceeding R ; R plus 8% on the consideration or value exceeding R Where can the Transfer Duty rates be accessed? The rates can be accessed on What is the rate of interest on overdue Transfer Duty? The present rate of interest which is levied is 10% per annum on outstanding Transfer Duty. What are all the Transfer Duty declarations available? The Transfer Duty declarations available are: TD1 Declaration by seller; TD2 Declaration by purchaser; TD3 Exemption from Transfer Duty; TD4 Declaration in relation to a change of beneficiaries/shareholders/members; TD5 Declaration by transferor and transferee where a transaction is subject to VAT and exempt from Transfer Duty in terms of section 9(15) of the Transfer Duty Act; TD6 If there are additional sellers/buyers/ properties; and TD7 Declaration by estate agent relating to a change of beneficiaries/shareholders/members of a trust owning residential property or a residential property company. Can the sale of a property be subject to both Transfer Duty and VAT? No, the sale cannot be subject to both. VAT takes preference over Transfer Duty. If the seller is registered for VAT as a vendor and the property forms part of his enterprise, then VAT is payable. If the seller is not registered for VAT or the property does not form part of his taxable supplies, Transfer Duty is payable. Which party determines whether a transaction would be subject to VAT or Transfer Duty? The seller determines whether a transaction would be subject to VAT or Transfer Duty. If the seller is a VAT vendor, then VAT issues arise. If a VAT vendor sells his private residence will the sale be subject to VAT or Transfer Duty? Where a VAT vendor sells his private residence, the residential property is exempt from VAT; therefore the sale will be subject to Transfer Duty. Is the property which is acquired by way of a donation subject to Transfer Duty or Donations Tax or both? Where a property is acquired by way of a donation, the transaction is subject to both Donations Tax and Transfer Duty. Note: Fair market value is regarded as the value on which both Transfer Duty and Donations Tax will be calculated. What is a residential property holding company? This is a company where the only asset or greater part of the value of assets (i.e., more than 50%) comprises of residential property, or a right to such property. From when is the acquisition of shares/ members interest in a residential property holding company or CC subject to Transfer Duty? With effect from 13 December 2002 the acquisition of shares or members interest in a residential property holding company or CC is subject to Transfer Duty.

3 Will Transfer Duty be payable when there is a change in member s interest in a CC in respect of farm property? No, there will be no Transfer Duty payable when there is a change in members interest in a CC in respect of farm property as farm property is not zoned for residential use. Securities transfer tax (STT) will be payable at a rate of 0.25% (currently) on the taxable amount of that security. Refer to Fin-CH-11-G1 External Reference Guide Securities Transfer Tax on the SARS website. Where the transaction was entered into on/ after 23 February 2011 the same rates will apply to all persons (including Companies, CC s and Trusts). Where a person acts as an agent for a purchaser, must the agent disclose this information to the seller? Yes, where a person acts as an agent for a purchaser, this information must be disclosed to the seller. What are the consequences of not disclosing the principal s information? The consequence of not disclosing the principal s information is that the agent will be liable for the transfer duty personally. If the purchaser pays the estate agent s commission is there any Transfer Duty payable on the commission? Yes, if the estate agent s commission is paid by the purchaser, Transfer Duty is payable on the commission. Note: Where the property is sold in execution, only the amount above 5% of the purchase price will be added to the purchase price before transfer duty is calculated. On which value will Transfer Duty be payable? Transfer Duty is payable on the consideration or the declared value (i.e. the fair value of the property). Where the Commissioner is not satisfied with the declared value, in terms of section 5(6) of the Transfer Duty Act, he is entitled to call for independent valuations of the property. SARS will request this in writing. Acceptable valuations are: Transactional value; Municipal valuation; Estate Agent valuation; or Sworn appraiser s valuation. Additional valuations will be requested in the following instances (but not limited to), where: there are connected parties, as indicated on the declarations; or there is knowledge that the value/consideration is under/overstated. Where the additional valuations are requested, the following will be regarded as acceptable: 2 x Independent Estate Agent valuations; or 1 x Sworn appraiser s valuation. What does fair value mean? Fair value is the fair market value. What does Fair market value (FMV) mean? Fair market value means the prices which can be obtained upon the sale of the property between a willing buyer and seller dealing at arm s length in an open market. What is bare dominium? This term refers to the diminished rights of a property owner whose land is subject to real rights (such as a usufruct or habitatio). What is Usufruct? A limited real right to use and derive profit/ benefit from property that belongs to another, as long as the property is not damaged.

4 What is habitatio? A limited real right to inhabit the house/dwelling of another, but the holder of the right has a right to residence only, not to the profit/benefit from the property. How are the calculations done for Transfer Duty? Please refer to the Transfer Duty Handbook on the SARS Internet for a full explanation on how the calculations should be done. What is a Servitude? A registered real right that a person has over the immoveable property of another. It grants the holder a benefit in the land and prohibits the normal use of the land by the owner. What is the formula used in the calculation of value of usufruct? The formula used in the calculation of value for usufruct is: Fair market value x usufruct factor x usufruct percentage (%) = value of usufruct. Can I object to any decision made by SARS regarding my Transfer Duty application? Yes, an objection can be lodged to any decision made by SARS concerning a Transfer Duty application, refer to > Legal and Policy > Dispute Resolution (including Alternate Dispute Resolution.(ADR)). In which area (SARS branch) must I submit my Transfer Duty application? Refer to the SARS website, for the listed branches under the heading Contact Us. What is the formula used in the calculation of value of bare dominium? The formula used in the calculation of value of bare dominium is: Fair market value usufruct = bare dominium. Why must Transfer Duty be paid on the cancellation of a usufruct? Transfer Duty must be paid on the cancellation of a usufruct, as per the definition of a transaction in the Transfer Duty Act, because the value of the property is enhanced by the renunciation of a right (i.e. the cancellation of the usufruct) on the property. Should the Transfer Duty forms and payments be submitted simultaneously? No, this is not a requirement. However, if the payment is not submitted together with the application, this will be requested via Request additional information on efiling.

5 Exemptions (including TD5 exemption applications) What acquisitions are exempt from transfer duty? Acquisitions by the following persons are exempt from Transfer Duty: The Government and provincial administration; Municipality; Water services provider; PBO; Public Hospital; Heir or legatee in respect of property acquired from the deceased; Surviving or divorced spouse; and Partnerships transfer from partnership to individual partner s name. The following acquisitions are exempt: Partition between joint owners; Sole ownership of entire property by a joint owner; Surviving or divorced spouse; ½ share in property by a spouse married in community of property where the other spouse acquired property prior to the date of marriage; Company re-organisation transactions; Superannuation funds of former TBVC self-governing territories; Correction of errors in registration; Transfer to trustees, administrators, beneficiaries and/or insolvent persons; Transfer to surety; Transactions declared void by a competent court; Transactions becoming void by insolvency of seller; Transactions abandoned by trustee on insolvency of purchaser; Property acquired by subsidiary company; Expropriation; Taxable supply of goods to the person acquiring the property; and Conversion in terms of item 8 of Schedule 1 to the Share Blocks Control Act. Note: Refer to AS-TD-02 G1-A1 - List of Exemptions - External Annexure for full details on all exemptions allowed. If I applied for an exemption, but the exemption was declined, where can the reasons be found? The reason for declining the Transfer Duty transaction will be found on efiling. What are the requirements for the sale of a property to be regarded as the supply of a going concern and therefore subject to VAT at the zero rate? The requirements for the sale of a property to be regarded as the supply of a going concern is: The seller and purchaser must be registered vendors; The supply must consist of an enterprise or part of an enterprise which is capable of separate operation; The parties must agree in writing that the supply is a going concern; The seller and purchaser must, at the conclusion of the agreement, agree in writing that the enterprise must be an income-earning activity on the date of transfer thereof; The assets necessary for carrying on the enterprise must be disposed of to the purchaser; and The parties must agree in writing that the consideration for the supply includes VAT at the } zero rate. What is the process that will be followed where I submit for a TD5 exemption? The following process will be followed where a TD5 exemption application is received: On receipt of a TD5 application, SARS will assess the vendor s (seller) tax compliance concerning all taxes with regard to the submission of returns and payments.

6 If there is repeated non-compliance (i.e. non filing of returns or non payment of taxes on more than one occasion for each tax type), the vendor s (seller) representative in this instance, the conveyancer will be informed of the options available to the vendor before the Transfer Duty exemption certificate can be issued. What are the options available concerning the TD5 exemption application, if there is repeated non-compliance? Where there is repeated non-compliance the following options are available to the vendor: Resolve all outstanding tax obligations; Provide security for the Value-Added Tax (VAT) payment; or Instruct the attorney to provide an undertaking for the VAT payment in respect of the property transaction for which the application is being made. Note: for more information, refer to AS-TD-L03 available on What are the requirements for the so-called tax free transfers? Transfer of property by Company/CC on or after 1 October 2010 but no later than 31 December 2012 Where the source document is deed of sale/ anything other than a deed of sale: TD3 An affidavit, verifying the following: The property has been utilised mainly for domestic use since 11 February 2009 and will continue to be used in this manner till the date of registration of transfer. The persons held all the share capital of the company or members interest in the CC as from 11 February 2009 to the date of registration of the transfer. A copy of the share register of the company/ CK1(CK2) of the CC, with an affidavit by the public officer that the information supplied reflects the position as at 11 February A copy of the municipal account as proof of residence. A deed search as proof of date of registration in the name of the company/cc. Certified copy of the Transfer Duty receipt in cases where the shares/members interest was acquired: On/after 13 December 2002; and After the property was registered at the Deeds Registry Proof of termination of company/cc Copy of the required special/written resolution/ statement; and Proof of all outstanding issues with SARS has been resolved, or an extension has been granted. Transfer of property by trust on or after 1 OCTOBER 2010 but no later than 31 December 2012 Where the source document is deed of sale/ anything other than a deed of sale TD3 An affidavit, verifying the following: The property has been utilised mainly for domestic use since the 11 February 2009 and will continue to be used in this manner till the date of registration of transfer. The name of the persons who financed all the expenditure actually incurred by the trust to acquire and improve the property. Proof from the bank who is financing all the expenditures. The trust deed. A copy of the municipal account as proof of residence. A Deed search as proof of date of registration in the name of the trust. Certified copy of the Transfer Duty receipt in cases where the rights were acquired by the persons seeking the exemption: On/after 13 December 2002; and After the property was registered at the Deeds Registry. Where the property has been disposed of to that trust by way of a donation, settlement or other disposition: A certified copy of the deed of donation, deed of settlement or other deed of alienation must be submitted and ensure exemption only applies in favour of the same person who donated or otherwise alienated it to the trust. Proof of revocation of trust Copy of the required special/written resolution/ statement; and. Proof of all outstanding issues with SARS has been resolved, or an extension has been granted.

7 Electronic Submission of Transfer Duty (efiling) How do I register for efiling? A client/conveyancer can register for efiling by: 1. Logging on to 2. Click on REGISTER, 3. Complete the six-step registration process guidance is provided. Note: A step-by-step quick reference guide Transfer duty on efiling is available on How do I access Transfer Duty on efiling? A client/conveyancer can access Transfer Duty on efiling by: Logging on to efiling; Select Services ; Select Transfer Duty ; and Select Enter. Note: A step-by-step quick reference guide Transfer duty on efiling is available on How do I capture a declaration? On the Transfer Duty Screen, select the relevant Transfer Duty form to proceed with capturing. Select New TD ; New TD3 ; New TD4 ; New TD5. Capture the relevant information on the declaration. The document can be saved and edited at a later stage What is the difference between the Transaction types Purchased on the TD1 declaration? There are different Transaction types Purchased and these are explained below: Undivided This is the default and most common one where the normal sale of a property takes place; Servitude - A registered real right that a person has over the immovable property of another. It grants the holder a benefit in or prohibits the normal rights of ownership; Habitatio - A limited real right to inhabit the house/dwelling of another but the holder of the right has a right to residence only, not to the profit/benefit from the property; and Usufruct - A limited real right to use and derive profit/benefit from property that belongs to another, as long as the property is not damaged. How do I submit the declaration? Once all the required information has been captured correctly, click Submit. On completion and submission of all the applicable declarations and payments, where applicable, the transaction is locked to protect it against any further editing. If two or more sellers/buyers are added on the form by mistake, how can I submit the form? efiling declarations allow for the removal of additional sellers or purchasers before a declaration must be submitted.

8 How are supporting documents uploaded? To upload supporting documents, follow the steps below: Select the document management option on the Transfer Duty Dashboard; Select the browse button; System displays the windows browser and user can navigate to the correct directory; Select the document that needs to be uploaded; System displays the path directory and name of the file selected by the user; If this information displayed is correct select upload ; System uploads document; System displays the document as uploaded. Note: Document(s) to be uploaded MUST be in one of the following formats: PDF/JPG/ TIF/DOC to enable viewing by SARS How do I make a payment on efiling? To make a payment on efiling follow the below steps: Select Payments menu option; System displays a list of transfer duties amounts that need to be paid; Select the transaction to pay by clicking on the appropriate block; Click on make electronic payment ; System displays the payment details screen; Capture the following information: The account that the payment is made from can be selected from a list of already redefined accounts loaded on efiling. The account details are defaulted; The payment request date; The payment amount. The payment can be split and the payment amount should be modifiable; Any comments associated with the payment. After all information is captured the select do payment ; System displays a confirmation page of the payment transaction details; Select confirm; System submits payment to the bank. How do I get a receipt for Transfer Duty via efiling? Once the transaction has been authorized by SARS, the receipt/exemption certificate will be displayed on efiling on the top right hand side of the screen. The client/conveyancer will have the option to either Print Receipt or Print Deposit. The receipt/exemption certificate must be printed and attached to the documentation submitted to the Registrar of Deeds. The electronic receipts/exemptions will be accepted by the Registrar of Deeds. To print the receipt, follow the steps below: System displays the Transfer Duty dashboard; Select print appropriate Transfer Duty receipt button; System displays the appropriate Transfer Duty receipt; Select the print option; System displays the printer selection window. Note: A deposit receipt cannot be used for registration in the Deeds Office. The receipt must display the word RECEIPT on the top left and the status of the transaction must be a print. If I selected the incorrect SARS branch, how can this be rectified? Where a Transfer Duty application has been submitted to the incorrect SARS branch a new transaction needs to be submitted to the correct branch. If I submitted a declaration incorrectly on efiling, is it possible to edit the information or should I resubmit the declaration? Where the Transfer Duty declaration has been submitted incorrectly and the transaction status is Transaction is Locked, the client/conveyancer will need to: Re-submit the Transfer Duty transaction, including both declarations and payments, where applicable. Request a refund in respect of any payments made for the initial incorrectly submitted transaction, refer to paragraph 5.4 below, Request for a refund.

9 When do I use which form and for which transaction? The forms are used as follows: TRANSFER DUTY TYPE FORM TO BE USED DESCRIPTION Transfer of Property (Normal) Transfer of Property (donation/exchange/ partition/cancellation) Change of shareholders/ members/ beneficiaries Transfer of property subject to VAT Notarial Deeds TD1 TD2 Deed of sale TD1 TD2 Agreement to the transaction TD4 Agreement to the transaction. TD5 Deed of Sale TD VAT (If requested by SARS) TD1 TD2 Notarial Deed Declaration of Seller Declaration of Purchaser Supporting documentation that needs to be scanned in and needs to be submitted with the declarations. Declaration of Seller Declaration of Purchaser Supporting documentation that needs to be scanned in and needs to be submitted with the declarations. Declaration in relation to change of beneficiaries/ shareholders/ members with regards to Transfer Duty. Supporting documentation that needs to be scanned in and needs to be submitted with the declarations. Declaration by transferor/transferee. Supporting documentation that needs to be scanned in and needs to be submitted with the declarations. VAT payment undertaking in respect of Transfer of Property. Declaration of seller/transferor deemed to be grantor. Declaration of buyer/transferee deemed to be grantee. Supporting documentation that needs to be scanned in and needs to be submitted with the declaration.

10 Request a refund When can a refund be requested? A refund may be requested where: Any amount was paid in excess in respect of Transfer Duty, additional duty, penalty or interest; The transaction has been cancelled; The transaction has been declined; The application was submitted to the incorrect office; or VAT security was paid in respect of a TD5 application. What documents must be submitted when requesting a refund? The request for a refund is a manual process, and may only be submitted at a SARS branch. The following documents must be submitted when requesting a refund: REV16 Claim for refund out of revenue; Original Receipt; TD1, TD2; Cancellation declaration by Seller; Cancellation declaration by Purchaser; Cancellation agreement; Copy of the Deed of Sale; Deeds office print out only if lodged at the Deeds office; and Explanation as to whether the deposit paid by the purchaser was retained by the seller (this needs to be done in all cases where the Deed of Sale made provision for a deposit to be paid). The following document must be supplied for an application for refund where security in respect of VAT was paid for a TD5 application: A request in writing must be submitted to the SARS branch, where the security was paid Enquiry on Status of a transfer Duty Transaction How do I determine the status of my transaction? To determine the status of a transaction: Log on to efiling; Navigate to Transfer Duty ; Select the SARS branch; Enter the SARS ref; Click Search ; Select the applicable transaction; and The status will be displayed in the yellow block in the right hand corner. * Information supplied by South African Revenue Services Pretoria, as appeared in S.A. Deeds Journal July 2012 issue 27. contact us n Cape Town Tel: n FISH HOEK Tel: ntableview Tel: nclaremont Tel: n SOMERSET MALL Tel: ntygervalley Tel: njohannesburg Tel: