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Stamp Duty
Procedure to claim refund on stamp duty:
27 March 2009 Legal & Policy: Regulations issued under section 33 of the Stamp Duties Act, 1968, (1) providing for the demonetization of adhesive revenue stamps and prescribing the procedures for the refund of the value of unused revenue stamps and (2) providing for the discontinuance of the use of revenue franking machines and prescribing the procedures for the refund of the unused revenue value as set per revenue franking machine (GG No 32059 27 March 2009)
What is stamp duty?
Stamp duty is an indirect tax charged on an instrument which in this context means a formal legal document and includes any written document or piece of writing.
The Stamp Duties Act 77 of 1968 levies this duty on instruments such as leases of immovable property and unlisted marketable securities. However, it is not the name by which an instrument is known, but its legal nature that determines whether it is an instrument that attracts duties. And the type of instrument determines the rate at which the duty is charged.
An instrument is subject to stamp duty if it is executed in South Africa or if the instrument is executed outside the country but relates to any property or matter there.
It is the duty of the taxpayer to determine whether stamp duty must be paid. The person liable for the stamping of an instrument is obliged to pay over the stamp duty to SARS.
Where did stamp duty originate?
The existence of a form of stamp duty can be traced back to Roman times. However, most historians agree that stamp duty in its present form originated in Holland in 1624 where, in answer to a competition to discover a new form of tax, the idea was presented of requiring stamped paper for legal documents.
Stamp duty was introduced in England in 1694. Later most British colonies adopted stamp duty as a means of raising revenue.
The American states began levying their own stamp duty at the time of the Civil War. Spain, France, Italy and most other European nations have, at different times, also generated income this way. Russia and Cuba have also imposed this tax. And stamp duty is not uncommon in Africa: Lesotho, Tanzania, and Uganda also use stamp duty to collect revenue.
Stamp duty in South Africa
Stamp duty has been part of the South African tax system since 1911. It is therefore not a new or obscure tax unknown to the business community. The date of commencement of the Stamp Duties Act 77 of 1968 was 1 October 1968. This Act repealed the Stamp Duties Act 59 of 1962. Only 11cases concerning the 1968 Act have been reported since its inception 40 years ago.
Since the 1968 Act was promulgated, it has been amended in each year of existence. A substantial number of dutiable instruments have been deleted from the Act. The items that remain taxable are:
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How do you work out liability for stamp duty?
A number of steps need to be negotiated in determining liability:
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Is this instrument dutiable?
First, determine whether the instrument is a dutiable one. See Section 1 and Schedule 1 of the Act.
Who is liable for the stamp duty?
Second, determine who is liable for the stamping of the instrument by studying Section 7 of the Act.
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Does any exemption apply?
Verify that no exemption applies as a result of the identity of the person carrying the liability or as a result of the nature of the transaction. See Section 4 and Schedule 1 to the Act.
What is the amount of the stamp duty payable?
The next step is to calculate the amount payable according to Schedule 1. In cases of doubt or difficulty in determining the value or consideration upon which stamp duty is payable, SARS may determine the amount.
The amount that SARS determines is then conclusive in determining the stamp duty that must be paid, unless that amount is shown to be incorrect or excessive.
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What rates apply to lease agreements and unlisted marketable securities?
Stamp duty is levied at the following rates:
Leases of immovable property
For the period ending 31 December 2004
For every R100 or part thereof of aggregate rent and any other consideration:
Period not exceeding five years - 25 cents
Period exceeding five years but not 10 years - 40 cents
Period exceeding 10 years but not 20 years - 55 cents
Period exceeding 20 years - 70 cents
From 1 January 2005
The duty is imposed at 0.5% of the quantifiable amount of a lease. When the rental is not quantifiable (for example, if it is based on turnover), duty will be payable when the amount becomes quantifiable.
Marketable securities
Registration of transfer (other than through a stockbroker)
0,25 per cent for every R10, or part thereof, of the amount or value of the consideration given, or where the consideration given is less than the market value, the value of the marketable security transferred.
Cancellation or redemption of company shares
0,25 per cent for every R10, or part thereof, of the value of the consideration given.
Acquisition by transferee from transferor
0,25 per cent for every R10, or part thereof, of the amount or value of the consideration given, or where the considerative given is less than the value of the marketable security transferred, the value of the marketable security transferred.
How must the stamp duty be paid?
After establishing the amount of stamp duty payable, the duty must be paid over to SARS. Section 5 of the Act allows five different methods of paying stamp duty, interest, penalties and additional duty:
- the use of adhesive stamps;
- the use of a franking machine;
- the special receipt method;
- payment on declaration; and
- e-stamping.
From 1 April 2005, e-stamps can be used to electronically pay duties on leases and agreements of lease, as well as on transactions in marketable securities. It has been proposed that adhesive revenue stamps be phased out and that permission to use franking machines be withdrawn.
These measures, as well as the introduction of e-stamps, are aimed at:
-
supporting taxpayers by providing a more cost-effective means of administering their liabilities;
-
providing an efficient client service;
-
alleviating the administrative burden on taxpayers; and
-
preventing fraud.
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Where can I get revenue stamps to pay stamp duty?
Reveue stamps can be purchase at any SARS office or SA Post Office during office hours
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Dutiable instruments deleted from the Act
The following Items which formed part of Schedule 1 to the Stamp Duties Act, 1968, have been abolished from the Act:
|
ITEMS OF SCHEDULE 1 |
DUTIABLE
INSTRUMENT |
EFFECTIVE DATE ABOLISHED FROM ACT |
|
|
|
|
|
1 |
Affidavit or solemn or attested declaration |
15 August 1994 |
|
2 |
Agreement or Contracts |
1 April 1993 |
|
3 |
Antenuptial or Postnuptial Contracts |
1 April 1999 |
|
4 |
Arbitration or award |
15 August 1994 |
|
5 |
Bill of exchange or Promissory Note |
1 April 2001 |
|
6 |
Debit Entries |
1 March 2005 |
|
7 |
Bonds |
1 March 2004 |
|
8 |
Brokers Note |
15 August 1994 |
|
9 |
Charter Party |
15 August 1994 |
|
10 |
Company capital duty |
1 January 1974 |
|
11 |
Customs and Excise documents |
1 April 2001 |
|
12 |
Duplicate |
1 April 1999 |
|
13 |
Fixed deposit receipt |
1 April 2003 |
|
13A |
Instalment Credit Agreements |
1 March 2005 |
|
15 |
Item 15(1) and (2): Issue of marketable Securities |
1 January 2006 |
|
16 |
Notarial Act or Instrument |
15 August 1974 |
|
17 |
Partnerships |
1 April 1999 |
|
18 |
Policy of insurance |
1 April 2003 |
|
19 |
Power of Attorney |
1 April 1999 |
|
20 |
Securities |
1 April 2001 |
|
21 |
Transfer deed |
13 July 1988 |
|
22 |
Warehouse receipt |
15 August 1974 |
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Where can I find out more about stamp duty?
This is just a basic guide to stamp duty. For greater detail see the stamp duty handbook.
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Where can I find the Revenue Laws Amendment Acts?
Click on: Legislation / Acts / Amendment Act /
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Where can I get more information on the SARS E-Stamps System?
E-Stamps Call Centre for general inquiries
All tax related queries on E-Stamps
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