1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

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