Property companies urged to get familiar with legislation before making the move to list.
The Real Estate Investment Trust (REIT) regime is set to usher in a new era for the listed property sector by affording certain tax advantages to qualifying entities and providing certainty in respect of the tax treatment of property loan stock companies. However, as the legislation is new and untested, uncertainties and anomalies exist, which could result in unforeseen tax implications for any company wishing to list as a REIT or a joint venture company where a shareholder is about to become a REIT.
This is according to Gary Vogelman, Executive at ENS (Edward Nathan Sonnenbergs), who says in spite of the tax benefits that can be enjoyed by a property company and its shareholders upon the listing of such property company as a REIT, it's crucial to be well-read in the potential pitfalls of the legislation.
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.