Page 1143 - SAIT Compendium 2016 Volume2

CLAUSE BY CLAUSE
CLAUSE 1
TRANSFER DUTY
EXPLANATORY MEMORANDUM ON THE TAXATION LAWS AMENDMENT BILL, 2015
IV. Effective date
The proposed amendments will come into operation on 1 April 2016.
6.6 REPEALING THE ZERO RATING FOR THE NATIONAL HOUSING PROGRAMME
[Applicable provisions: Sections 8(23) and 11(2)(s)]
I. Background
The current section 11(2)(s), read together with section 8(23), makes provision for the zero- rating of services supplied to a public authority or municipality to the extent of any payment made to or on behalf of that vendor in terms of a national housing programme contemplated in the Housing Act, 1997 (Act No. 107 of 1997).
The Housing Act, 1997, speci cally section 4(3)(g), empowers the Minister of Human Settlements (then Housing) to institute and nance national housing programmes. Further, in terms of section 4(3)(d), the Minister of Finance may allocate funds for national housing programmes to provincial governments, including funds for national housing programmes administered by municipalities. The Housing Act, 107 of 1997 de nes national housing programmes as any national policy framework to facilitate housing development, including, but not limited to, any housing assistance measures referred to in section 3(5) or any other measure or arrangement to–
1. assist persons who cannot independently provide for their own housing needs;
2. facilitate housing delivery; or
3. rehabilitate and upgrade existing housing stock, including municipal services and infrastructure;
In section 3(5)(a) the Housing Act provides for the Housing Subsidy Scheme as one of the housing assistance measures deemed to be national housing programmes instituted by the Minister. There are also a variety of housing programmes to provide housing assistance to poor households in a variety of forms. The department was responsible for identifying the projects that quali ed for zero-rating under the Housing Subsidy Scheme. To this effect, vendors would be informed of the zero-rated status of the projects and on that basis zero-rate the supplies of services to any public authority or local authority to the extent of any payment in terms of the Housing Subsidy Scheme. However, it has been administratively dif cult to implement the VAT provision effectively due to the variations in the programmes and the legislative interpretation by various role-players involved in the implementation of the housing programme.
As a consequence, the VAT Act was amended in 2010 to provide for the Minister of Finance to issue Regulations specifying the projects that will qualify for the zero rated status. It was anticipated that the development of regulations would remedy the administrative dif culties identi ed previously by providing clarity and simplifying the application of the VAT concessions. To the contrary, it was not as simple as anticipated and it would have not resolved all the problems being experienced with the administration of the zero-rating provision. The main dif culty was that the national housing programme had a number of variations which were going to create practical dif culties relating to administration and implementation of the zero-rating provision. The variations were largely due to the fact that programmes were more holistic programmes which include rental stock (i.e. exempt supply of dwellings), community developments and many other facilities. The Regulations were therefore not promulgated.
II. Reasons for change
Though the policy was well intended, the administrative complexities of applying the zero-rate provision to the various housing programmes has made it dif cult for all the stakeholders to have a common understanding and application of the provision.
III. Proposal
It is proposed to abolish the current provisions of zero-rating for the supply of goods and services in terms of the national housing programme contemplated in the Housing Act, 1997.
IV. Effective date
The proposed amendments will come into operation on 1 April 2017.
Transfer Duty: Amendment to section 2
This amendment corrects a grammatical error and changes the word ‘reduced’ to ‘altered’.
ESTATE DUTY
CLAUSE 2
Estate Duty: Amendment to section 3
See notes on CLOSING A LOOPHOLE TO AVOID ESTATE DUTY THROUGH EXCESSIVE
CONTRIBUTIONS TO RETIREMENT FUNDS
SAIT CompendIum oF TAx LegISLATIon VoLume 2 1135