Is your tax in order?
| If you are planning to buy a property, make sure your
tax affairs are in order and make sure you have an exit route from
the deal if any other party is not up to date with his taxes.
According to Gerhard Kotzé, CEO of the ERA South Africa property group, it is well known that the SA Revenue Service has been tightening up on delinquent tax payers.
That also explains the large increases in what the Receiver of Revenue likes to call 'collections', Kotzé says.
"Sars is reportedly keeping a special eye on property transactions as a means of identifying tax cheats. Obviously if someone buys a home at a price that is out of kilter with his declared earnings, it sounds a warning bell with Sars, which has access to Deeds Office information before transfer is registered."
He said if a potential problem is identified, the transaction is likely to be stopped until the case is investigated.
"That would take time and could mean that the other participants in a property deal have their plans totally thrown out of the window."
The deal could simply fall through, while Sars could end up taking a long look at the tax affairs of all the participants, so the knock on effect on their private and business lives is potentially significant.
"The simple answer is to ensure your own tax affairs are in order so that the Receiver gives you a clean bill of health and, just as importantly, to ensure that your offer to purchase includes a clause which would allow you to cancel the deal without prejudice should one or more of the parties in the chain have a tax problem."
Article from: http://iafrica.com