Sanchia Temkin

Professional Services Editor

THE South African Revenue Service (SARS) can delay the transfer of sales of property if buyers’ and sellers’ tax affairs are not in order, according to regulations which came into effect last month.

The regulations, which affect all taxpayers, including individuals, trusts and companies, require both the property seller and buyer to complete a declaration in terms of the Transfer Duty Act stating that their tax affairs are in order.

SARS spokesman Adrian Lackay said that SARS may appoint an agent, such as a conveyancer handling the sale of the property, to recover all outstanding taxes from the selling price.

"SARS may also appoint the employer of the seller or any other person who has the management, custody or control of any income, money or property of the taxpayer to pay over the outstanding taxes," Lackay said.

The new regulations could cause lengthy delays in finalising property transactions, which could deter potential buyers from entering the market, according to industry and tax experts.

Lackay said SARS would not adopt a heavy-handed approach in enforcing the regulations, but would afford taxpayers the opportunity to explain why their tax affairs were not in order.

"Should the taxpayer fail to do so, the transaction will be delayed for a short period of time while SARS institutes the necessary recovery steps."

Vivienne Hosiosky, a director and conveyancer at Werksmans Attorneys, said the regulations would have adverse implications for buyers and sellers who wanted a quick turnover.

"Usually a transfer duty receipt will be issued in three to four days," Hosiosky said. "Now the procedure could be delayed for a lengthy period," she said.

Hosiosky said warranties should be inserted into sale agreements to make sellers and buyers aware of the regulations.

Billy Joubert, a tax partner at Deloitte, said that nonresidents had always been liable for capital gains in certain circumstances, such as immovable property.

The new forms would ensure that such transactions were properly identified, Joubert said.

Lackay said that if taxpayers did not resolve their outstanding tax affairs with SARS, the property could be attached, alternatively garnishee orders could be issued to their employers or banks.