Dear Reader

Welcome to this week’s Vat Bulletin.

I decided to focus on the imminent abolition of stamp duty as this is an issue (although not exclusively a Vat issue) which has an effect on most, if not all, of us. Peter Franck wrote the following insightful article for us. Enjoy!
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You’ll be interested to learn the Revenue Laws Amendment Act, 2008, has repealed the Stamp Duties Act with effect from 1 April 2009.

Originally, you had to pay stamp duty on share transfers and all other contracts, such as the letting of fixed property, rental of vehicles or office equipment, hire-purchase agreements and even ante-nuptial contracts.

Over the years, however, the duty on these documents has gradually fallen away.

The last remaining stamp duty was on fixed property leases

While the stamp duty is payable by the landlords, they usually recover it from their tenants. For landlords (or lessors), this means that:

1. Any fixed property lease concluded (signed) on or after 1 April 2009 mustn’t be stamped.

Example

Propco lets a factory to Joe's Mineral Works for 10 years at R10 000 per month. The lease is signed on 1 April 2009.

Stamp Duty payable:

From 1 April 2009 = NIL
Previously = R6 000 (0.5% on R12 million)

2. No further stamp duty is payable on any lease concluded before 1 April 2009 where stamp duty is payable yearly (once the rent for the previous year has been determined) if the liability to pay the further duty falls on or after 1 April 2009.

Example

Propco lets a shop to Felicity's Flowers on 1 May 2008 for ten years. The rent payable is R10 000 per month, but it escalates with the inflation rate (CPIX) each year. As the amount by which the rent will escalate in future years was unknown when the lease was concluded, the lease must be stamped annually.

The stamp duty payable in year one was R600 (0.5% on R12 000).

Previously, extra stamp duty would be payable each year. Now no further stamp duty is payable as the liability date for the annual stamp duty falls after 1 April 2009.

This is very important for turnover leases or any other lease where some of the future rentals couldn’t be determined on the date the lease was concluded!

What if you have unused revenue stamps or a franking machine?

Many businesses, such as banks, letting agents, accountants and attorneys, often keep a supply of revenue stamps. You can return unused revenue stamps to a SARS branch office for a refund by completing a Revenue 17 form (available on the SARS website www.sars.gov.za under “forms”). Put the stamps in an envelope and attach it to the form. Ensure you get an acknowledgement of the receipt from SARS.

If your business uses franking machines, you may also claim refunds for the credit value on any such machine by taking the machine and value cards to your local SARS office.

Tip: You, with other South African businesses, can claim your share of up to R100 million in unused revenue stamps and franking machine credits. However, you must submit your refund application by 30 June 2009 – SARS won’t consider applications after that date.

Remember: Since 1 July 2008, share transfers are no longer subject to stamp duty

They are subject to securities transfer tax at a rate of 0.25% on the greater of the consideration for, or the market value of the shares or member's interest in a close corporation transferred. This duty is collected by stock brokers (if the share is quoted on the JSE), or by the transfer secretary of the company or CC in all other cases.

Until next time,

Nothando Hlatshwayo

Managing Editor
The Practical Vat Handbook

PS: If you require a new binder or have a query regarding payments, deliveries and change of address details, please send an email to queries@fsp.co.za.