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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

35A. Withholding of amounts from payments to non-resident sellers of immovable property

 

(1) Any person (hereinafter referred to as ‘the purchaser’) who must pay any amount to any other person who is not a resident (hereinafter referred to as ‘the seller’), or to any other person for or on behalf of that seller, in respect of the disposal by that seller of any immovable property in the Republic must, subject to subsection (2), withhold from the amount which that person must so pay, an amount equal to—
(a) 5 per cent of the amount so payable, in the case where the seller is a natural person;
(b) 7,5 per cent of the amount so payable, in the case where the seller is a company; and
(c) 10 per cent of the amount so payable, in the case where the seller is a trust.

 

(2) The seller may apply to the Commissioner, in the form and at the place as the Commissioner may determine, for a directive that no amount or a reduced amount be withheld by the purchaser in terms of subsection (1) solely having regard to—
(a) any security furnished for the payment of any tax due on the disposal of the immovable property by the seller;
(b) the extent of the assets of the seller in the Republic;
(c) whether that seller is subject to tax in respect of the disposal of the immovable property; and
(d) whether the actual liability of that seller for tax in respect of the disposal of the immovable property is less than the amount contemplated in subsection (1).

 

(3)
(a) The amount withheld from any payment to the seller in terms of subsection (1) is an advance in respect of that seller’s liability for normal tax for the year of assessment during which that property is disposed of by that seller.
(b) If the seller does not submit a return in respect of that year of assessment within 12 months after the end of that year of assessment, the payment of the amount in terms of subsection (4) is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.

[Paragraph (b) amended by section 2 of Act No. 16 of 2016]

[Subsection (3) amended by section 2 of the Tax Administration Laws Amendment Act, 2015 (Act No. 23 of 2015)]

 

(4)        The amount withheld by a purchaser in terms of subsection (1), must be paid to the Commissioner—

(a) where that purchaser is a resident, within 14 days after the date on which that amount was so withheld; or
(b) where that purchaser is not a resident, within 28 days after the date on which that amount was so withheld.

 

(5) If an amount has been withheld in terms of subsection (1) from any amount payable in a foreign currency, that amount so withheld must be translated to the currency of the Republic at the spot rate on the date that the amount is paid to the Commissioner.

 

(6)        The purchaser must, together with the payment contemplated in subsection (4), submit to the Commissioner a return.

 

(7) A purchaser is personally liable under the circumstances contemplated in section 157 of the Tax Administration Act, for the amount that must be withheld under subsection (1) only if the purchaser knows or should reasonably have known that the seller is not a resident and must pay that amount to the Commissioner not later than the date on which payment should have been made if the amount had in fact been withheld.

 

(8) Subsection (7) does not apply if an estate agent or conveyancer assists in the disposal of the immovable property and that estate agent or conveyancer fails to notify the purchaser as contemplated in subsection (11).

 

(9) If a purchaser fails to pay any amount contemplated in subsection (1) to the Commissioner within the period allowed for payment in terms of subsection (4), that purchaser must pay a penalty equal to ten per cent of the amount, in addition to any other penalty or charge for which he or she may be liable under this Act.

 

(10) [Deleted by the Tax Administration Act, 2011 (Act No. 28 of 2011)]

 

(11) Any estate agent and any conveyancer who is entitled to any remuneration or other payment in respect of services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be, must before any payment is made to the seller each notify the purchaser in writing of the fact that the seller is not a resident and that the provisions of this section may apply.

 

(12) If an estate agent or conveyancer knows or should reasonably have known that the seller is not a resident and fails to comply with subsection (11), that failing estate agent or conveyancer is jointly and severally liable for the payment of the amount which the purchaser is required to withhold and pay to the Commissioner in terms of this section, but limited to the amount of remuneration or other payment in respect of the services rendered in connection with the disposal of the immovable property by the seller or the registration of transfer, as the case may be.

 

(13) The estate agent or conveyancer who paid an amount in terms of subsection (12) is deemed to be a withholding agent for purposes of the Tax Administration Act.

 

(14)        This section does not apply—

(a) if the amounts payable by the purchaser to the seller and to any other person for or on behalf of the seller, in respect of the acquisition by that purchaser of the immovable property, in aggregate do not exceed R2 million; or
(b) in respect of any deposit paid by a purchaser for purposes of securing the disposal of the immovable property by the seller to that purchaser, until the agreement for that disposal has become unconditional, in which case any amount which would have been required to be withheld from the amount of that deposit, must be withheld from the first following payments made by that purchaser in respect of that disposal.

[Paragraph (b) amended by section 57 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]

 

(15)        For purposes of this section—

‘conveyancer’ means a ‘conveyancer’ as defined in section 102 of the Deeds Registries Act, 1937 (Act No. 47 of 1937);

‘estate agent’ means an ‘estate agent’ as defined in section 1 of the Estate Agency Affairs Act, 1976 (Act No. 112 of 1976);

‘foreign currency’ means any currency other than the currency of the Republic;

‘immovable property’ means immovable property contemplated in paragraph 2(1)(b)(i) and (2) of the Eighth Schedule.