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What are the VAT implications of a sale of a farm to the Department of Human Settlements?

Tuesday, 10 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A client of ours, who is VAT registered, is selling his farm which is currently income generating to the Department of Human Settlements. What is the VAT implication?

A: The supply of immoveable property used in an enterprise to make taxable supplies by a VAT vendor will result in a taxable supply for the purposes of section 7(1) of the VAT Act unless a specific exemption or zero rating applies. In our view the sale of the farm will only be zero rated if sold as a going concern in terms of section 11(1)(r) of the VAT Act if the relevant Department is a registered VAT vendor.

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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