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Property purchased: is transfer duty or input VAT claimable by a vendor?

Monday, 10 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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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 16(3)(a)(ii)(bb). 

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 Act.  

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.

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