SARS tightens its grip
If youre planning to buy or sell a house make sure your tax affairs are in order.
Not only that, ensure the person you are dealing with is in the clear as well.
The South African Revenue Service (Sars) has found a new way to knuckle down on the wealthy to make sure they pay their share to the fiscus. Its become particularly concerned about people who operate in the economy and dont declare all their earnings. Too many people who should pay tax are slipping through the cracks and there are others who should be paying more, who are not contributing their fair share.
While the new measures will go a long way to tackling tax cheats it could also cause endless bother for property owners, agents and conveyencing attorneys.
Consider the following scenario: A buys a house from B subject to the sale of their property, B in turn makes an offer to C, who also needs somewhere to live and makes an approach to D. Think for a moment of the consequences if D is a VAT vendor whose paperwork is a couple of months behind the knock-on effect for reliable tax-payers A, B and C could be devastating all four of the deals could be jeopardised simply because of the fact that D is lousy at paperwork, or worse, a tax-dodger.
Sars believes there are scores of people who dont pay the right amount of tax. They drive flashy cars and live in palatial homes. So the simplest way to keep tabs on them is to closely monitor property transactions and have the right to deeds office information before transfer is granted. If an anomaly turns up a transaction can be halted pending further investigation and settlement. Depending on the complexity of the case, it could take months, if not years.
This will put additional pressure on transferring attorneys and agents, who let's face it, earn fairly generous commissions for work that is not always commensurate with the effort expended.
You might find yourself under pressure to deliver a tax certificate at the time you put your house on the market or seek to buy a new property to expedite the process. But how much should that detail contain? Tax laws stipulate the affairs of an individual are between that person and Sars and no-one else. If you are forced to share that information with Lebo the agent, and Faan the attorney, it could have serious implications for privacy in tax affairs.
'A spanner in the works'
To add another dynamic to a potentially fraught process is the possibility that an assessment by Sars might not be correct. The service has certainly substantially jacked up its service in recent years and has spent considerable amounts of money attracting bright young talent to bolster its ranks. We are led to believe the number of errors has declined.
We have an efficient and smooth running property transfer system and it threatens to throw a spanner in the works, says MD of Jawitz Properties, Herschel Jawitz.
If you are considering entering the property market as either a buyer or a seller ensure you have an escape clause that enables you to get out of a deal immediately if the other party has a tax hiccup. But first, make sure your own tax affairs are in order.
Article by: Bruce Whitfield - http://business.iafrica.com