Property purchased: is transfer duty or input VAT claimable by a vendor?
10 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: I have purchased a property from a non-VAT vendor and I
have paid transfer duty. As a registered vendor when I claim back from SARS do
I claim transfer duty that I paid or am I entitled to claim VAT?
A: In terms of the definition of input tax in section 1(1)
of the Value-Added Tax Act ‘an amount equal to the tax fraction (at the time
the supply is deemed to have taken place) of the lesser of any consideration in
money given by the vendor for or the open market value of the supply (not being
a taxable supply) to him by way of a sale by a resident of the Republic (RSA) …
of any second-hand goods situated in the RSA’ will be input tax. According to the definition "second-hand
goods” means goods which were previously owned and used and we submit that in
this instance the fixed property is in fact second hand goods as defined.
The deduction can then be made ‘where the goods or services
concerned are acquired by the vendor wholly for the purpose of consumption, use
or supply in the course of making taxable supplies or, where the goods or
services are acquired by the vendor partly for such purpose, to the extent (as
determined in accordance with the provisions of section 17) that the goods or
services concerned are acquired by the vendor for such purpose’.
Remember that the input tax (or portion) may only be
deducted to the extent that payment has been made – see section
The recipient of second-hand goods must obtain and maintain
a declaration by the supplier stating whether the supply is a taxable supply or
not, and must further maintain sufficient records to enable specific
particulars to be ascertained as is stipulated in section 20(8) of the VAT
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.