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Home owners associations

Tuesday, 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: A "Home Owners Association” is generally defined as a property owners’ association which represents a body of multiple owners in full title or freehold housing schemes as opposed to sectional title schemes. The term "Home Owners Association” is not defined in the VAT Act, but Interpretation note 64 dealing with the exemption of income derived by body corporates, share block companies and association formed solely for purposes of managing the collective interests common to owners of immovable property specifically mentions that home owners associations and property owners associations are included in the definition of "association” provided.

Please confirm that the proposed amendment exempting a supply of services by a home owners association to any of its members from VAT does not apply to "property owner associations” where the members are all owners of commercial property. 


A: ‘‘(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,’’; and - The exemption only applies in as far as the expenditure relates to "…managing the collective interests of residential property…” 



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