TD 1 TO TD 7: THE NEW TRANSFER DUTY FORMS BY SARS Lizelle Kilbourn Director of Training Igqwetha Training Academy We acknowledge with thanks the information furnished and assistance rendered by Ms Lize Grobbelaar of SARS, Cape Town. ITA TRAINING SEMINAR 23/11/2018

Introduction SARS issued 7 new transfer duty forms We will explore: The reason behind SARS’ changing the forms The content of each of the seven new forms The implications for clients and others The changes that conveyancers and paralegals need to implement in practice, as a result of the new forms This seminar is from the paralegal’s perspective ITA TRAINING SEMINAR 23/11/2018

Overview of the forms TD 1- declaration by seller TD2 -declaration by purchaser TD 3- if transaction is not sale, add to TD1 and 2 TD 4-if not property sold, but shares/members interest or ‘sale of trust’ signed by entity TD 5-If Vat is payable (old VAT 249 form) TD 6- if more than 2 sellers, purchasers or props TD 7-by estate agent if ‘sale of shares, etc’ ITA TRAINING SEMINAR 23/11/2018

Implementation dates Transactions after 1 May 2005: use only new forms Old transactions, use old forms BUT From 1 September 2005 only use new forms, even for old transactions Submit manually, until SARS implement electronic system (September 2005?) ITA TRAINING SEMINAR 23/11/2018

Electronic transfer duty system SARS announced in press release Not yet operational, maybe September? Electronic submission of declarations Scanning of deed of sale Electronic payment of transfer duty Wait and see- monitor further developments ITA TRAINING SEMINAR 23/11/2018

Why did SARS prescribe new transfer duty forms? Given reasons: electronic lodgement, streamlining, ‘easy compliance’ Real priority: tightening the tax net, ‘holistic’ approach to tax collection Accommodate new legislation (share sales, CGT, etc) User friendly format, modern forms ITA TRAINING SEMINAR 23/11/2018

SARS new approach to tax collection Property sales as starting point to ensure general tax compliance Income Tax, VAT, CGT, donations tax, estate duty and other No transfer duty receipt if seller or purchaser’s general tax affairs not in order SARS checks that person is on tax register, payment of taxes, tax paper work in order ITA TRAINING SEMINAR 23/11/2018

Persons affected by the changes Sellers Purchasers Conveyancing firms Estate agency firms Individual agents Even builders ITA TRAINING SEMINAR 23/11/2018

See the new TD forms in context of SARS’ new strategy The forms require a lot of new information About seller and purchaser but also about indirectly involved parties, i.e. agent income tax numbers, annual income in R VAT registration numbers Contact telephone numbers Resident or non resident? What property used for Other ITA TRAINING SEMINAR 23/11/2018

How to generate the forms in your office Automated systems like Ghostconvey- forms have been loaded by suppliers Generate the documents as per usual with other transfer documents If needed, undergo product specific training To produce manually obtain from SARS website ITA TRAINING SEMINAR 23/11/2018

TD1- declaration by seller Usual procedure, signed by seller For more than 2 sellers or 2 properties, add TD 6 New information required include income tax no or income (are you on register?) VAT status and VAT number Resident status (CGT, VAT, IT) Date property acquired and price (CGT) Name estate agency, commission, VAT no and name individual agent (VAT, IT status of agent) CGT specific- and VAT specific questions See explanatory notes to form ITA TRAINING SEMINAR 23/11/2018

TD 2- Declaration by purchaser Usual procedure, signed by purchaser Part 1 and Part 2, being the receipt, same as old form For more than 2 purchasers or 2 properties add TD 6 New information include Income tax no or annual income Bond amount and name of granting bank Specific VAT and CGT questions See explanatory notes to form ITA TRAINING SEMINAR 23/11/2018

TD 3- where transaction is not a sale Use as annexure to TD 1 and 2 if the transaction was not a sale, but a- Donation Exchange Partition Cancellation of transaction Other TD 1 and 2 must still be fully completed, even if transferor and transferee are not “seller” and “purchaser”. ITA TRAINING SEMINAR 23/11/2018

TD 4- change of beneficiaries/ shareholders/members Brand new form- not direct conveyancing Law changed recently- transfer duty must be paid if property owning entity is sold or otherwise disposed of Not true conveyancing- no registration in deeds office, property stays in entity New trustee/member/shareholder etc to sign Dovetails with TD 7 signed by agent ITA TRAINING SEMINAR 23/11/2018

TD 5- the old VAT 249 form Complete when the transaction is VATable Only TD 5 is required, not TD 1 and 2 More or less the same info as old form, but also info on estate agency bond If p not VAT vendor then income tax no Clear format about when VAT will be paid Be careful to comply if zero rating asked Usual requirements to get td exemption cert ITA TRAINING SEMINAR 23/11/2018

TD 6- Annexure to TD 1, TD 2 Use as annexure, and only if- More than 2 sellers More than 2 purchasers More than 2 properties/not sufficient space All info on TD 1 and 2 must be repeated for the additional sellers/ purchasers, on this form Use for exclusive use areas ITA TRAINING SEMINAR 23/11/2018

TD 7- Declaration by estate agent Section 14(3) of TDA Use in conjunction with TD 4 Not strictly speaking conveyancing See explanatory notes to the form Educate agents ITA TRAINING SEMINAR 23/11/2018

Practical implications for conveyancing firms Increased risk of delays Client does not furnish you with all info SARS takes longer to examine forms SARS does not issue transfer duty receipt because tax affairs of client not in order What happens if dispute SARS and client? Paralegals need to understand the basics of CGT, VAT, Income tax and other taxes ITA TRAINING SEMINAR 23/11/2018

Practical implications for conveyancing firms (continue) First letter to seller and to purchaser to deal with new transfer duty implications Explain implications to client and to agent Ask for transfer duty upfront Submit docs to SARS asap Ask conveyancers to standardize documentation ITA TRAINING SEMINAR 23/11/2018

Implications of new SARS strategy for clients If client not on income tax register or on VAT register when should be, will be detected The transaction info may reveal that client is not paying due taxes (income, VAT, CGT) If overdue taxes, SARS may appoint conveyancer to pay over proceeds as taxes ITA TRAINING SEMINAR 23/11/2018

Summary The new forms are simple and easy to use Forms signify new approach by SARS Much more info from clients required Risk of delays obtaining transfer duty receipt Clients and agents face risks if tax affairs not in order Electronic system in due course ITA TRAINING SEMINAR 23/11/2018

Where to Get More Information Further training sessions SARS website ITA TRAINING SEMINAR 23/11/2018