Page 611 - Juta's Indirect Tax

IN 22 (3) TRANSFER DUTY ACT IN 22 (3)
2. Background
Transfer duty is levied on a sliding scale on the value of any property* acquired by any person under a transaction or in any other manner. The person acquiring the property (the transferee) is normally the person who is liable for the payment of transfer duty. All the exemptions from transfer duty are contained in section 9 of the Transfer Duty Act. The exemptions in section 9(1)(c) and section 9(1A) of the Transfer Duty Act apply to PBOs and statutory bodies meeting the requirements discussed in 4.1, 4.2, 4.3 and 4.5.
3. The law
Section 9(1)(c) of the Transfer Duty Act
9. Exemptions from duty.—(1) No duty shall be payable in respect of the acquisition of property by—
(c)
(i) a public bene t organisation contemplated in paragraph (a) of the de nition of ‘public bene t organisation’ in section 30(1) of the Income Tax Act, 1962 (Act 58 of 1962), that has been approved by the Commissioner in terms of section 30(3) of that Act; or
(ii) any institution, board or body, which is exempt from tax in terms of section 10(1)(cA)(i) of that Act, which has as its sole or principal object the carrying on of any public bene t activity contemplated in section 30 of that Act,
in respect of property acquired by such public bene t organisation, institution, board or body, the whole, or substantially the whole, of which will be used for the purposes of one or more public bene t activity carried on by such public bene t organisation, institution, board or body, as the case may be: Provided that if at any time subsequent to the acquisition thereof it is used otherwise than in the manner contemplated in this paragraph, duty shall become payable in respect of the acquisition of that property and the date upon which that property was rst so otherwise used shall for the purposes of section 3(1) and section 4 be deemed to be the date of acquisition thereof;
Section 9(1A) of the Transfer Duty Act
(1A) No duty shall be payable in respect of the registration of any property transferred by any public bene t organisation contemplated in paragraph (a) of the de nition of ‘public bene t organisation’ in section 30(1) of the Income Tax Act, 1962 (Act 58 of 1962), that has been approved by the Commissioner in terms of section 30(3) of that Act to any other entity which is controlled by that public bene t organisation;
4. Application of the law
4.1 Exemption of a public bene t organisation
In order to qualify for the exemption from the payment of transfer duty for the acquisition of property under section 9(1) (c)(i) of the Transfer Duty Act, the organisation applying for the exemption must be a PBO (see 4.1.1) and must use the whole or substantially the whole (see 4.3) of the property acquired for the carrying on of one or more PBAs (see 4.1.2).
4.1.1 Public bene t organisation
A PBO referred to in section 30(1)(a) means –
• a non-pro t company as de ned in section 1 of the Companies Act, a trust, or an association of persons incorporated,
formed or established in South Africa; or
• any branch within South Africa of any company, association or trust incorporated, formed or established in a country
outside South Africa and that is itself exempt from income tax in that other country.
A PBO must have as its sole or principal object the carrying on of one or more PBAs (see 4.1.2).
4.1.2 Public bene t activities
The PBAs are divided into the following categories: • Welfare and Humanitarian
• Health Care
• Land and Housing
• Education and Development
• Religion, Belief or Philosophy
• Cultural
• Conservation, Environment and Animal Welfare • Research and Consumer Rights
• Sport
• Providing of Funds, Assets or Other Resources • General
Speci c activities that qualify as PBAs are listed under each category heading (see Annexure A). A PBO that carries on one or more PBAs may qualify for exemption from the payment of transfer duty provided the requirements of section 9(1)(c) of the Transfer Duty Act are met.
Religious, charitable or educational institutions of a public character which were previously exempt under section 10(1)(f), and organisations providing residential accommodation to aged or retired persons which were exempt under section 10(1)(cF), quali ed for transfer duty exemption under section 9(1)(c) and section 9(1)(j) of the Transfer Duty
* See the definition of ‘property’ in section 1 of the Transfer Duty Act.
Juta’s IndIrect tax 2016 603