Page 614 - Juta's Indirect Tax

IN 22 (3) TRANSFER DUTY ACT IN 22 (3) PBA. The concept ‘sole or principal’ denotes that either the ‘only or the main, most important, chief, predominant’*
object must be the carrying on of one or more of these activities. This may be illustrated as follows:
Qualifying activities under section 10(1)(cA)(i)
Examples of statutory bodies carrying on qualifying activities
Reference to applicable PBA
Scienti c, technical or industrial research
Institutions, boards or bodies engaged in medical, water, animal or agricultural research.
PBA 8(a)
The provision of necessary or useful commodities, amenities or services to the State or members of the general public
Institutions, boards or bodies promoting, establishing, protecting, preserving or maintaining areas, collections or buildings of historical or cultural interest, national monuments, national heritage sites, museums including art galleries, archives and libraries.
PBA 6(a) or (b)
Institutions, boards or bodies engaging in the conservation, rehabilitation or protection of the natural environment, including ora and fauna.
PBA 7
Educational institutions (see 4.2.3).
PBA 4
The promotion of commerce, industry or agriculture
PBA 4
Example 3 – Statutory body which has as its sole or principal object the carrying on of a PBA
Facts:
A statutory body is established by law with the object of conducting research, development and technology transfer to promote agriculture and industry and therefore contributes to the improvement of the quality of life in South Africa. The body complies with all the requirements of section 10(1)(cA)(i). An exemption has been approved by the TEU. The body has acquired immovable property for purposes of erecting a laboratory to engage in research into the quality of the various cultivars of potatoes and their suitability for agricultural, commercial and consumption purposes. In particular, research is to be conducted into the most suitable type of cultivar for the manufacture of crisps with the least impact on the health of the consumer. A declaration has been submitted for the acquisition of the property (see 5).
Result:
The acquisition of the property will qualify for the exemption from the payment of transfer duty because – • the body is exempt under section 10(1)(cA)(i);
• the sole or principal object of the body is to conduct scienti c, technical or
• industrial research which activity quali es under PBA 8(a); and
• the whole of the property will be used to carry on the PBA.
4.2.3 Educational institutions qualifying as statutory bodies
The following educational institutions carrying on educational PBAs listed under the category ‘Educational and Development’† do not qualify as PBOs because they are established by or under law and must apply for approval as statutory bodies:
• A ‘public school’ as de ned in the South African Schools Act 84 of 1996. Such a school is exempt for income
tax purposes under section 10(1)(cA)(i).‡ SARS has not required each public school to apply for formal approval for exemption under section 10(1)(cA)(i). Approval has been given to the National Education Department for each Provincial Education Department to apply for a group registration for public schools registered in its area. See Example 4.
• A ‘public higher education institution’ established or declared as a public higher education institution under the Higher Education Act 101 of 1997.§
• A ‘public centre’ de ned in the Adult Education and Training Act 52 of 2000 which provides ‘adult education and training’.¶
• A ‘public college’ de ned in the Continuing Education and Training Act 16 of 2006 and established by the Minister by notice in the Gazette to provide ‘continuing education and training’.**
* M Wait, S Hawker and C Soanes Oxford Dictionary, Thesaurus, and Wordpower Guide (2001) Oxford University Press meaning of ‘sole’ or ‘principal’, respectively.
† PBA 4.
‡ PBA 4(a).
§ PBA 4(b). The Minister may by notice in the Gazette establish a specific university, technikon or college. ¶ PBA 4(c).
** PBA 4(d).
606 Juta’s IndIrect tax 2016