A new ruling by the SA Revenue Service that charges Vat on residential property was a mistake and is to be changed.

Sars Vat head Peter Franck agrees (see Property July 25) that ruling 386 is in conflict with the Value-Added Tax Act's definition of "dwelling".

The ruling redefined as "not supplying a dwelling" flats and houses not rented directly to tenants but to sub-landlords. Franck says it should apply to properties that are not intended specifically for residential purposes.

"It was badly worded and will be corrected," he says. "Vat should apply only to nonresidential property."

Financial Mail