Category: Property law


Section 35A of the Income Tax Act[1] came into effect on 1 September 2007 and sets out the capital gains tax consequences of the sale of immovable property situated in South Africa in instances where the seller is not a South African tax resident.

In terms of these provisions, the purchaser of the immovable property is obliged to withhold the specified amount of tax from the purchase price payable, provided that the property is disposed of for an amount in excess of R2 million.

The amount to be withheld in these circumstances is 7.5% of the purchase price where the seller is a natural person, 10% of the purchase price where the seller is a company and 15% of the purchase price where the seller is a trust.

The amount of tax withheld in these circumstances must be paid to the South African Revenue Service (“SARS”) within 14 days after the date on which the amount was so withheld in instances where the purchaser is a South African tax resident. The period is extended to 28 days should the purchaser not be a South African tax resident.

The non-resident seller of the immovable property may, however, request a tax directive from SARS confirming that tax be withheld at a lower or even zero rate, depending on the specific circumstances applicable to that non-resident seller. In this regard, SARS will take into account factors such as any security furnished for the payment of any tax due on the disposal of the immovable property, whether the seller is subject to tax in respect of such disposal and whether the actual tax liability of the non-resident seller is less than the amount to be withheld in terms of section 35A.

In order to request such a tax directive, the non-resident seller must complete the relevant form NR03 and submit this to SARS, together with the offer to purchase, the relevant capital gains tax calculation and all other relevant supporting documentation. According to SARS’ website, the processing of this declaration or directive application is 21 working days.

The amount withheld from any payment to the non-resident seller is an advance payment in respect of that seller’s liability for normal tax for the year of assessment during which the property is disposed of by the non-resident seller.

Please note that if the non-resident seller does not submit an income tax return in respect of that year of assessment within 12 months after the end of that year of assessment, the payment of the amount under section 35A is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.[2]

[1] No. 58 of 1962

[2] No. 28 of 2011

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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BloksMunicipalities are required to issue rates clearance certificates without which a property cannot be transferred from a seller to a buyer. The rates clearance certificate certifies that outstanding debts owing to a municipality up to the date of transfer have been settled.

Property buyers relied on these certificates as proof that all previous debt on the property have been fully settled and that transfer of the property to the buyer could proceed.

However, in some cases rates clearance certificates are issued while all charges for the period before the transfer date of a property to a new owner are not yet allocated to the municipal accounts of the previous owners. The question then is: can the new owner of the property be held liable for these historic debts incurred before it became owner of the property?

The first court case

In a court case between a municipality and a ratepayer in May 2013, the judgement made by the court was incorrectly interpreted by municipalities. Based on their interpretation, municipalities held new property owners liable for municipal debt incurred by previous owners and refused to issue rates clearance certificates until all such debt were paid.

In addition, municipal services to a property would be cut off and municipalities would refuse to reconnect such services until all debt were fully settled. Buyers who wanted to take transfer of the property had no choice but to settle debt for services not consumed by themselves.

The second court case

A subsequent court case issued judgement on 8 September 2014, stating that the municipalities’ interpretation of the previous judgement was wrong. The following principles were laid down:

  • A municipality’s right to payment, although attached to a specific property, ended when a property was transferred to a new owner. Outstanding municipal debts up to date of transfer had to be recovered from the seller.
  • Payment of debt for services consumed by a previous owner remained the responsibility of that owner. The buyer of a property is not liable for debt incurred for services consumed prior to the transfer of the property.

What happened next?

The second judgement referred to above was the subject of an appeal to the Supreme Court of Appeal (City of Tshwane Metropolitan Municipality v PJ Mitchell (38/2015) [2016] ZASCA 1). The appeal was successful, with obvious serious consequences for property owners.

As a result of the successful appeal, new home owners can in law be liable for municipal debts of their predecessors in title. Consequently, it would now be up to property owners themselves to recover these amounts from previous owners, and no longer the duty of the municipality seeking to recover its debts to do so. The obligation for ensuring that no outstanding municipal debts exist upon transfer has therefore now shifted definitively to property buyers, and away from municipalities in issuing rates clearance certificates (which is different from the position prior to the successful appeal a few months ago).

This is an arduous task, and one which property buyers should take very seriously when purchasing a property to ensure that no unpleasant surprises materialise in the months (or even years) following the transfer of the property in the deeds office to their name.

Reference List:

Accessed on 21 April 2016:

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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BloksDaar word van munisipaliteite verwag om munisipale uitklaringsertifikate uit te reik waarsonder eiendom nie van die verkoper na die koper oorgedra kan word nie. Die uitklaringsertifikate sertifiseer dat alle uitstaande bedrae verskuldig aan die Munisipaliteit tot op die datum van oordrag vereffen is.

Kopers van eiendomme maak staat op hierdie sertifikate as bewys dat alle vorige skuld op die eiendom ten volle betaal is en dat oordrag van die eiendom na die koper mag voortgaan.

In sommige gevalle is die uitklaringsertifikate egter reeds uitgereik, alhoewel alle skulde vir die tydperk voor die oordragdatum van eiendom aan ‘n nuwe eienaar nog nie op die munisipale rekenings van die vorige eienaars verreken is nie. Die vraag is nou: kan die nuwe eienaar van die eiendom aanspreeklik gehou word vir hierdie historiese skulde wat aangegaan is voordat hy eienaarskap van die eiendom geneem het?

Die eerste hofsaak

In ‘n hofsaak tussen ‘n Munisipaliteit en ‘n belastingbetaler in Mei 2013 is die uitspraak wat deur die hof gemaak is verkeerd deur munisipaliteite geïnterpreteer. Gebaseer op hul interpretasie het munisipaliteite nuwe eienaars van eiendomme aanspreeklik gehou vir munisipale skuld aangegaan deur vorige eienaars, en het hulle geweier om munisipale uitklaringsertifikate uit te reik totdat alle sodanige skuld vereffen is.

Verder sou munisipale dienste na sodanige eiendom afgesny word en munisipaliteite sou weier om dienste weer aan te sluit totdat alle skulde ten volle betaal is. Kopers wat oordrag van die eiendom wou neem, het geen keuse gehad as om te betaal vir dienste wat nie deur hulself gebruik is nie.

Die tweede hofsaak

‘n Daaropvolgende hofsaak op 8 September 2014 het uitspraak gelewer dat die munisipaliteite die vorige uitspraak verkeerd geïnterpreteer het. Die volgende beginsels is neergelê:

  • ‘n Munisipaliteit se reg tot betaling, alhoewel dit aan ‘n spesifieke eiendom gekoppel is, het geëindig wanneer die eiendom na ‘n nuwe eienaar oorgedra is. Uitstaande munisipale skulde tot op datum van oordrag moet van die verkoper verhaal word.
  • Betaling van skulde vir dienste gebruik deur ‘n vorige eienaar het die verantwoordelikheid van daardie eienaar gebly. Die koper van ‘n eiendom is nie aanspreeklik vir skulde aangegaan vir dienste gebruik voor die oordrag van die eiendom nie.

Wat het volgende gebeur?

Die tweede uitspraak waarna hierbo verwys word, was die onderwerp van ‘n appèl tot die Appèlhof (City of Tshwane Metropolitan Municipality v PJ Mitchell (38/2015) [2016] ZASCA 1). Die appèl was suksesvol, met ooglopende ernstige gevolge vir eienaars van eiendom.

As gevolg van hierdie suksesvolle appèl kan huiseienaars nou volgens wet aanspreeklik wees vir munisipale skuld van hul voorgangers in titel. Dit berus dus nou by die nuwe eienaars om self die uitstaande bedrae van die vorige eienaars te verhaal, en is dit nie meer die plig van die munisipaliteit om die bedrae aan hom verskuldig van die vorige eienaar te verhaal nie. Die verpligting om te verseker dat geen uitstaande munisipale skulde met oordrag bestaan nie, het nou finaal verskuif na die kopers van eiendom, en weg van munisipaliteite in die uitreik van uitklaringsertifikate (wat verskil van die posisie voor die suksesvolle appèl ‘n aantal maande gelede).

Dit is ‘n veeleisende taak, en een wat kopers van eiendom ernstig moet opneem wanneer hulle ‘n eiendom koop, om te verseker dat geen onaangename verrassings opduik in die maande (of selfs jare) na die oordrag van die eiendom op hul name in die Aktekantoor nie.


Toegang verkry op 21 April 2016:

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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