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Club/ Homeowners Association

18 March 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical 

The answer to this query is based on legislation as at 2014/03/18. 

Q: I have done some homework into the new amendment act with regard to homeowners associations. According to Section 12(f) (IV) and Section 8(2G) there has been an extension to services supplied by homeowners associations to members, effective date 1 April 2014.

My client, a boat club, is renting property from the government on a 99 year lease (first option to buy, offer already in). The club is a non profit organisation. All homeowners belong to the club. So the club's income is broken down as follows: Sites and services levies Membership fees - Homeowners & Public (New members) Petrol - Non VAT Gate Takings - each member / homeowner has to pay for their visitors entrance fee for the day, they also offer the service to the public. Boat shed / Garage - levy Launching Fee - Offered to homeowners and members (Sometimes one and the same) Camping site - Public. Guesthouse - Public Hall Rental - Homeowners & Public.

Basically I would like to know whether the new law would apply to them or would it just apply to certain income that the club receives? 


A: "the supply of any services to any of its members in the course of the management of— (iv) any association of persons (other than a company registered or deemed to be registered under the Companies Act, 2008 (Act No. 71 of 2008), any co-operative, close corporation or trust, but including a non-profit company as defined in section 1 of the Companies Act, 2008 (Act No. 71 of 2008)) where the Commissioner is satisfied that, subject to such conditions as he or she may deem necessary, such association of persons—

(a) has been formed solely for purposes of managing the collective interests of residential property use or ownership of all its members, which includes expenditure applicable to the common immovable property of such members and the collection of levies for which such members are liable; and

(b) is not permitted to distribute any of its funds to any person other than a similar association of persons, where the cost of supplying such services is met out of contributions levied by such body corporate, share block company or under such housing development scheme or association, as the case may be:

Provided that this paragraph shall not apply or shall apply to a limited extent where such body corporate, share block company, scheme or association applies in writing to the Commissioner, and the Commissioner, having regard to the circumstances of the case, directs with effect from a future date that the provisions of this paragraph shall not apply to that body corporate, share block company, scheme or association or that the provisions of this paragraph shall apply only to a limited extent specified by him:

Provided further that this paragraph shall not apply to the services supplied by anybody corporate, share block company, scheme or association which manages a property time-sharing scheme as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of 1983)

My concerns are the following:

(1) I am not certain whether the boat club was formed for the sole reason of managing the collective interests of the residential property. Boat parking, visitors fees etc. makes me wonder whether this is 100% a HOA.

(2) In the event that it is 100% a HOA, then I doubt that the external source of income can be regarded levies. The exemption should therefore only apply to contributions (levies) made by the members of the association to defray the cost of services supplied to the association and not to other income which may be generated by the association.


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.


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