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Section 35

25 October 2007

Basically it appears that a seller is considered to be a non-resident until he proves otherwise for sales above R2m. To understand what the consequences of this are, we have compiled a useful checklist to determine a natural person's resident status. The Checklist is not a SARS document.

The following sections of the SARS website contain useful information:

EXTERNAL POLICY:
The external policy of Section 35 A of the Income Tax Act explains how Section 35A is to be applied. To access it, either select the hyperlinked documents below or do the following steps by first going to sars.gov.za and:
o Clicking on the Taxes Drop Down Menu,
o Selecting CGT,
o Clicking Go!,
o Selecting Publications, and
o Selecting AS - CGT - 02 - WITHHOLDING AMOUNTS FROM PAYMENTS TO NON-RESIDENT SELLERS OF IMMOVABLE PROPERTY IN SA and AS - CGT - 02 - S1 STANDARD OPERATING PROCEDURE - EXTERNAL - WITHHOLDING AMOUNTS FROM PAYMENTS TO NON-RESIDENT SELLERS OF IMMOVABLE PROPERTY IN SOUTH AFRICA .


DECLARATION BY PURCHASER AND REQUEST FOR A TAX DIRECTIVE:
The Declaration by Purchaser (NR 02) and the Request for a Tax Directive by the Seller (NR 03) can be accessed by either selecting the hyperlinked documents below or by doing the following steps by first going to sars.gov.za and:
o Clicking on the Taxes Drop Down Menu,
o Selecting Forms,
o Clicking Go!,
o Clicking on Non-Residents, and
o Selecting NR 02 - Declaration by purchaser for the sale of immovable property in South Africa by a non-resident or NR 03 - Application for tax directive by non resident seller of immovable property in South Africa

IRP 6 (3) PAYMENT ADVICE:
Whenever payment of the withholding tax is paid over to SARS, it must be done under cover of a IRP 6 (3) Payment Advice (this means that the payment will be paid into the third period for Provisional Tax). It can be accessed by either selecting the hyperlinked document below or by doing the following steps by first going to sars.gov.za and:
o Clicking on the Taxes Drop Down Menu,
o Selecting Income Tax,
o Click Go!,
o Selecting IT Forms, and
o Selecting IRP 6(3)e Payment Advice for additional provisional tax

FURTHER NOTES

  1. SARS will be holding workshops to discuss Section 35 A. Dates still have to be decided upon.
  2. There is an error on the Request for a Tax Directive (NR 03) as the signature line provides for the Purchaser to sign the Request whereas it is, of course, the Seller who must sign it. Until this form is corrected, one must simply cross out the word 'Purchaser' and replace it with the word 'Seller."
  3. Note 1 on the Declaration by Purchaser (NR 02) is incorrect as section 35 A is simply the withholding of funds provision. A Non Resident Seller who sold property prior to 1 September 2007 is still subject to CGT. The only difference is that there will not be a % of the purchase price paid over to SARS upfront.

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