When is the time of supply for the sale of commercial property?
01 June 2015
Posted by: Author: SAIT Technical
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
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.