Page 613 - Juta's Indirect Tax

IN 22 (3) TRANSFER DUTY ACT IN 22 (3)
Example 2 – PBO providing assets to another PBO
Facts:
Kings Trust, a PBO, has been established to hold immovable property for the bene t of Stuart High School, an independent school carrying on PBA 4(a). The trust has acquired immovable property to be developed as follows:
• Five residential units for occupation by senior educators of the school.
• Swimming pool and tennis courts for use by the learners of the school.
• Athletics track for use by the school.
A declaration has been submitted for the acquisition of the property (see 5).
Result:
The acquisition of the immovable property by the trust will qualify for the exemption from the payment of transfer duty, because –
• the trust is a PBO;
• the trust is carrying on PBA 10, namely, the provision of assets to the school which is also a PBO to be used in
carrying on its educational PBA; and
• the whole of the property will be used to carry on the PBA.
4.1.3 Educational institutions qualifying as public bene t organisations
The following educational institutions carrying on educational PBAs listed under the category ‘Educational and Development’* may apply for approval as a PBO:
• An independent school registered under the South African Schools Act 84 of 1996 which is established under a
founding document such as a constitution, trust deed or memorandum of incorporation.†
• A ‘private higher education institution’ as de ned and registered under the Higher Education Act 101 of 1997 which
provides ‘higher education.‡
• A ‘private centre’ de ned and registered under the Adult Education and Training Act 52 of 2000 which provides ‘adult
education and training’.§
• A ‘private college’ de ned and registered under the Continuing Education and Training Act 16 of 2006 which provides
‘continuing education and training’.¶
4.2 Exemption for a statutory body
In order to qualify for the exemption from the payment of transfer duty for the acquisition of property under section 9(1)(c)(ii) of the Transfer Duty Act, the organisation applying for the exemption must be a statutory body (see 4.2.1) 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).
4.2.1 A statutory body
In order to qualify for exemption under section 10(1)(cA)(i), an organisation must be established by or under law for a speci c object (see 4.2.2). A statutory body must be approved by the Commissioner before the exemption will apply. The following organisations are speci cally excluded from qualifying for exemption under section 10(1)(cA)(i):
• A company registered under the Companies Act.
• A co-operative.
• A close corporation.
• A trust.
• A water services provider.**
The exemption from the payment of transfer duty is inapplicable to a wholly owned subsidiary company of a statutory body which is exempt under section 10(1)(cA)(ii).
4.2.2 Sole or principal object of a statutory body
In order to comply with section 10(1)(cA)(i) the sole or principal object of a statutory body must be to –
• conduct scienti c, technical or industrial research;
• provide necessary or useful commodities, amenities or services to the State which includes any provincial
administration or members of the general public; or
• carry on activities (including the rendering of nancial assistance by way of loans or otherwise) designed to promote
commerce, industry or agriculture or any branch thereof.
In order to qualify for the exemption from the payment of transfer duty, a statutory body must have as its sole or principal object the carrying on of any PBA (see 4.1.2). The sole or principal object of the statutory body must therefore be the carrying on of one or more of the activities required in section 10(1)(cA)(i) and those activities must also qualify as a
* PBA 4.
† PBA 4(a).
‡ PBA4(b).
§ PBA 4(c).
¶ PBA 4(d).
** See the definition of ‘water services provider’ in section 1(1).
Juta’s IndIrect tax 2016 605