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When is the time of supply for the sale of commercial property?

01 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Is there anything in the VAT Act that allows for the payment of VAT on a commercial property transaction when the money is received rather than when the property is transferred (other than the sale of a going concern which is of course zero rated)?

A: We submit that the Value-Added Tax Act actually provides that the output (and input) tax on the supply of fixed property is only accounted for when ‘paid’. 

Where the time of supply of goods consisting of fixed property or any real right therein are supplied under a sale, that supply is deemed to take place:

               where registration of transfer of the goods is effected in a deeds registry, on the date of such registration; or

               on the date on which any payment is made in respect of the consideration for such supply,

whichever date is earlier. 

This is in terms of section 9(3)(d). 

However, section 16(3)(iiA) provides that, in respect of a vendor accounting for the tax on the invoice basis apply and where the supply is not to a connected person, the vendor must only account for the output tax "to the extent that payment of any consideration which has the effect of reducing or discharging any obligation (whether an existing obligation or an obligation which will arise in the future) relating to the purchase price for those supplies has been made during that tax period”.  This effectively is the same as a person accounting for the tax on the payments basis. 

The VAT Act therefore allows for the output tax to be accounted for when the money is received.  We haven’t dealt with a deposit as it was not required. 

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. 


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