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Can a vendor claim the transfer duty paid on property purchased prior to VAT registration

19 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Is a vendor (a partnership) able to claim the transfer duty paid on property purchased prior to it registering as a vat vendor?

A husband and wife jointly purchased an apartment for carrying on a business of short term holiday accommodation. The transfer of property is dated November 2014. There is a partnership agreement between the husband and wife. The partnership is now applying to register as vendor.

A: There are some other issues that must be addressed before we deal with the request. 

The first issue is that a partnership is, for value-added tax purposes, a person separate from the partners.  The registration must therefore be made in the name of the partnership. 

Based on the intended use of the property we accept that the value of taxable supplies (of commercial accommodation) exceeded or will exceed the additional R60 000 threshold – refer to proviso (ix) of the definition of enterprise. 

The last point is that the transfer duty can, since 10 January 2012, no longer be deducted.  The deduction of the transfer duty was replaced by the tax fraction of the consideration, but see below. 

Our guidance assumes that that the partnership will be registered as a vendor and will be using the property of the partnership in the course of making taxable supplies (or partly so). 

The registration of a person as a vendor is a tax event envisaged by section 18(4), if the goods or services acquired before the effective date will subsequently be applied for use in the course of making taxable supplies.  The requirement (in that section) is that "tax has been charged in respect of that supply.”  Because transfer duty was paid it was not acquired from a vendor and section 18(4)(c) will apply – second hand goods. 

The deduction is made in terms of section 16(3)(f) and the documents to substantiate the deduction is set out in Interpretation Note 49, item E of Table C – Special deductions against output tax. 

Because the goods (or services) are deemed to have been supplied in the tax period (in terms of section 18(4)) of the change in use the deduction must be made in that period.  The person has five years from this date to make the deduction if the documents are not available in this period.  The same applies to second-hand goods. 

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.


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.


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.

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