unit trust that invests in immovable property, receives income from rental and
pays it through to its investors. In terms of new legislation which becomes
effective 1 April 2013, a REIT can deduct such distributions if it resides in
South Africa, is listed and at least 75% of its gross income is rental income.
has been much concern that this regime is going to leave unlisted REITS
horribly exposed, particularly when SARS looks to introduce legislation to deal
with what is today described as artificial debt. This really relates to the
debenture portion of a property linked unit, where the debt instrument is not
likely to be repaid in 30 years. SARS are now looking to re characterise some
of these debt instruments as shares if they have certain stipulated features.
Accordingly, the Budget review indicates that
the REITS legislation will look to extend to unlisted REITS provided they are
subject to similar regulation as listed REITS. It does not indicate how this
regulation is going to be introduced (currently the JSE Limited is the
regulator of listed REITS). The Treasury would want it to be extended to wholly
owned entities of private and Government pension funds, as well as the long
term insurers. It appears that they may be considering the legislation to deal
with property syndication, because it indicates that REIT tax relief would be
extended to cover other real estate entities subject to such regulation.
Moreover it indicates that the property syndication legislation needs to
protect investors from the Ponzi schemes which we have seen over the last
couple of years.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.
MINIMUM REQUIREMENTS TO REGISTER
The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.