AA - 2016

Author:  Johan Greyling – STBB
2 February 2016

SECTION 35A WITHHOLDING TAX ON NON-RESIDENTS SELLING IMMOVABLE PROPERTY  

A recent amendment to the Income Tax Act will treat the advance payment, a withholding tax of … [5%, 7.5% or 10%]…  [these percentages were increased from:  1 September 2007]…. to:

7.5% where the seller is a natural person;
10% where the seller is a company; and
15% where the seller is a trust

on: of the sale proceeds required where a non-resident sells immovable property, as a final payment in certain circumstances.

It works as follows: If the advance payment is greater than the taxpayer’s actual liability, SARS may retain this whole advance payment as a final payment of the assessed tax due, should the Taxpayer fail to submit an income tax return within 12 months after the year-end of the year in which the property was transferred.

Non-resident sellers are therefore advised to either apply for a tax directive when selling their properties or to ensure that they file their tax returns within the allowed time period to ensure that they can claim the refund due to them following the possible overpayment resulting from the withholding tax being applied.

For assistance, contact our Tax Department

{note:  it is important to check that these percentages have not increased}