TD 1 TO TD 7: THE NEW TRANSFER DUTY FORMS BY SARS

1
TD 1 TO TD 7 THE NEW TRANSFER DUTY FORMS BY SARS

• Lizelle Kilbourn
• Director of Training
• Igqwetha Training Academy
• We acknowledge with thanks the information
  furnished and assistance rendered by Ms Lize
  Grobbelaar of SARS, Cape Town.

2
Introduction

• SARS issued 7 new transfer duty forms
• We will explore
• The reason behind SARS changing the forms
• The content of each of the seven new forms
• The implications for clients and others
• The changes that conveyancers and paralegals need
  to implement in practice, as a result of the new
  forms
• This seminar is from the paralegals perspective

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Overview of the forms

• TD 1- declaration by seller
• TD2 -declaration by purchaser
• TD 3- if transaction is not sale, add to TD1 and
  2
• TD 4-if not property sold, but shares/members
  interest or sale of trust signed by entity
• TD 5-If Vat is payable (old VAT 249 form)
• TD 6- if more than 2 sellers, purchasers or props
• TD 7-by estate agent if sale of shares, etc

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Implementation dates

• Transactions after 1 May 2005 use only new forms
• Old transactions, use old forms BUT
• From 1 September 2005 only use new forms, even
  for old transactions
• Submit manually, until SARS implement electronic
  system (September 2005?)

5
Electronic transfer duty system

• SARS announced in press release
• Not yet operational, maybe September?
• Electronic submission of declarations
• Scanning of deed of sale
• Electronic payment of transfer duty
• Wait and see- monitor further developments

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Why did SARS prescribe new transfer duty forms?

• Given reasons electronic lodgement,
  streamlining, easy compliance
• Real priority tightening the tax net, holistic
  approach to tax collection
• Accommodate new legislation (share sales, CGT,
  etc)
• User friendly format, modern forms

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SARS new approach to tax collection

• Property sales as starting point to ensure
  general tax compliance
• Income Tax, VAT, CGT, donations tax, estate duty
  and other
• No transfer duty receipt if seller or purchasers
  general tax affairs not in order
• SARS checks that person is on tax register,
  payment of taxes, tax paper work in order

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Persons affected by the changes

• Sellers
• Purchasers
• Conveyancing firms
• Estate agency firms
• Individual agents
• Even builders

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See the new TD forms in context of SARS new
strategy

• The forms require a lot of new information
• About seller and purchaser but also about
  indirectly involved parties, i.e. agent
• income tax numbers, annual income in R
• VAT registration numbers
• Contact telephone numbers
• Resident or non resident?
• What property used for
• Other

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How to generate the forms in your office

• Automated systems like Ghostconvey- forms have
  been loaded by suppliers
• Generate the documents as per usual with other
  transfer documents
• If needed, undergo product specific training
• To produce manually obtain from SARS website

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TD1- declaration by seller

• Usual procedure, signed by seller
• For more than 2 sellers or 2 properties, add TD 6
  
• New information required include
• income tax no or income (are you on register?)
• VAT status and VAT number
• Resident status (CGT, VAT, IT)
• Date property acquired and price (CGT)
• Name estate agency, commission, VAT no and name
  individual agent (VAT, IT status of agent)
• CGT specific- and VAT specific questions
• See explanatory notes to form

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TD 2- Declaration by purchaser

• Usual procedure, signed by purchaser
• Part 1 and Part 2, being the receipt, same as old
  form
• For more than 2 purchasers or 2 properties add TD
  6
• New information include
• Income tax no or annual income
• Bond amount and name of granting bank
• Specific VAT and CGT questions
• See explanatory notes to form

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TD 3- where transaction is not a sale

• Use as annexure to TD 1 and 2 if the transaction
  was not a sale, but a-
• Donation
• Exchange
• Partition
• Cancellation of transaction
• Other
• TD 1 and 2 must still be fully completed, even if
  transferor and transferee are not seller and
  purchaser.

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TD 4- change of beneficiaries/ shareholders/member
s

• Brand new form- not direct conveyancing
• Law changed recently- transfer duty must be paid
  if property owning entity is sold or otherwise
  disposed of
• Not true conveyancing- no registration in deeds
  office, property stays in entity
• New trustee/member/shareholder etc to sign
• Dovetails with TD 7 signed by agent

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TD 5- the old VAT 249 form

• Complete when the transaction is VATable
• Only TD 5 is required, not TD 1 and 2
• More or less the same info as old form, but also
• info on estate agency
• bond
• If p not VAT vendor then income tax no
• Clear format about when VAT will be paid
• Be careful to comply if zero rating asked
• Usual requirements to get td exemption cert

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TD 6- Annexure to TD 1, TD 2

• Use as annexure, and only if-
• More than 2 sellers
• More than 2 purchasers
• More than 2 properties/not sufficient space
• All info on TD 1 and 2 must be repeated for the
  additional sellers/ purchasers, on this form
• Use for exclusive use areas

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TD 7- Declaration by estate agent

• Section 14(3) of TDA
• Use in conjunction with TD 4
• Not strictly speaking conveyancing
• See explanatory notes to the form
• Educate agents

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Practical implications for conveyancing firms

• Increased risk of delays
• Client does not furnish you with all info
• SARS takes longer to examine forms
• SARS does not issue transfer duty receipt because
  tax affairs of client not in order
• What happens if dispute SARS and client?
• Paralegals need to understand the basics of CGT,
  VAT, Income tax and other taxes

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Practical implications for conveyancing firms
(continue)

• First letter to seller and to purchaser to deal
  with new transfer duty implications
• Explain implications to client and to agent
• Ask for transfer duty upfront
• Submit docs to SARS asap
• Ask conveyancers to standardize documentation

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Implications of new SARS strategy for clients

• If client not on income tax register or on VAT
  register when should be, will be detected
• The transaction info may reveal that client is
  not paying due taxes (income, VAT, CGT)
• If overdue taxes, SARS may appoint conveyancer to
  pay over proceeds as taxes

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Summary

• The new forms are simple and easy to use
• Forms signify new approach by SARS
• Much more info from clients required
• Risk of delays obtaining transfer duty receipt
• Clients and agents face risks if tax affairs not
  in order
• Electronic system in due course

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Where to Get More Information

• Further training sessions
• SARS website