WITHHOLDING TAX WHERE NON-RESIDENTS DISPOSE OF IMMOVABLE PROPERTY

Abstract

A new section 35A has been inserted into the Income Tax Act 58 of 1962 by the Revenue Laws Amendment Act 32 of 2004, published in Government Gazette 27188 of 24 January 2005. It will come into operation on a date to be determined by proclamation in the Gazette. Essentially the new provision imposes a statutory duty on a purchaser of immovable property to withhold a certain percentage of the amount payable to the seller in respect of the sale, and to pay over such amount to SARS, where
(a) the seller is a non-resident; and
(b) the total amount payable by the purchaser to the seller (or to someone acting on behalf of the seller) is more than R2-million.
The duty to withhold the percentage in question rests on all purchasers of immovable property, residents as well as non-residents. To ensure compliance certain onerous duties are placed on estate agents and conveyancers rendering professional services in respect of the sale of immovable properties.