Guide to Amounts to be Withheld when a Non-Resident Sells Immovable Property in South Africa (SA)

Summary

The withholding tax on amounts paid by the Purchaser to Non-Resident sellers of Immovable Property situated within South Africa, as prescribed in Section 35A of the Income Tax Act came into effect from 1 September 2007.

Any person (Purchaser) who is required to pay any amount to a Non-Resident (Seller), or to any other person on behalf of the Seller, in respect of the disposal of Immovable Property in the Republic, must withhold from the amount payable an amount equal to:

7,5% of the amount payable, if the seller is a natural person;
10% of the amount payable, if the seller is a company; and
15% of the amount payable, if the seller is a trust.

Note: Where the value of the property exceeds R2 million, the withholding amount applies to the full purchase price, without regard to the R2 million threshold.

The Seller may apply to the Commissioner, in a format and at the location determined by the Commissioner, for a directive that no amount be reduced or withheld by the purchaser, based solely on:

Any security furnished for the payment of any tax due on the disposal of the Immovable Property by the seller.
Whether the seller is subject to tax in respect of the disposal of the immovable property; and
Whether the actual liability of the seller in respect of tax at the time of the disposal of the immovable property is less than the amount arrived at by applying the percentages of 7, 5%, 10% or 15% as the case may be, stipulated above.

The amount withheld from any payment to the Seller is an advance payment in respect of the seller’s liability for normal tax for the year of assessment during which the property is disposed of by the seller.

If the Seller does not submit a return in respect of that year of assessment within 12 months after the end of that year of assessment, the payment of the amount under subsection (4) is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.

Section 35A of the Income Tax Act does not apply to the following:

If the amounts payable by the Purchaser to the seller and any other person for or on behalf of the Seller, in respect of the acquisition by that purchaser of the Immovable Property, in aggregate do not exceed R2 million, or
In respect of any deposit paid by the Purchaser for the purpose of securing the disposal of the property by the Seller to that purchaser until the agreement for that disposal becomes unconditional, in which case any amount which would have been required to be withheld from the amount of the deposit must be withheld from the first following payments made by the purchaser in respect of that disposal.

Application of Tax Directive for Withholding and Return Submission

The Seller, Purchaser, Conveyancer, or Estate agent can download the application and return by logging onto the SARS website at www.sars.gov.za.

On SARS Home Page >Select Types of Tax
Select Capital Gains Tax;
Under the Forms tab, select NR03 (Tax Directive Application by Non-Resident Seller of Immovable Property in SA); or
Select NR02 (Declaration by Purchaser for Sale of Immovable Property in SA by Non – Resident).

The Seller/Purchaser/Conveyancer/Estate agent must –

Click on the form;
Print the form; and
Manually complete the relevant information required.

The Seller/Purchaser/Conveyancer/Estate agent or Representative must complete the mandatory information and submit the application for a Tax Directive (NR03) or the Return (NR02) and the Deed of sale via email.

Email: [email protected].

The details of the Taxpayer Engagement Unit to which the applications must be forwarded, are as follows:

Postal address	Physical Address	Other channel Address
Randburg Private Bag X15, Alberton, 1450	Randburg Branch Office 25 Hill Street Ferndale	Email address: [email protected]

Note 1: The Seller or Representative is required to request, complete and submit the Tax Directive application by Non-Resident of Immovable Property in SA (NR03) and the Purchaser/Conveyancer/Estate agent must complete and submit the declaration By Purchaser of sale of Immovable Property in SA by Non-Resident (NR02).

Note 2: When applying for the Transfer Duty receipt, the conveyancer must select YES at the question ‘Are the provisions of Section 35A of the Income Tax Act 1962 applicable?’ This is found in the Details of Property container. The NR02 or NR03 must be uploaded along with the Deed of Sale.

The processing time for the Tax Directive application (NR02)/Return (NR03) is 21 business days.

When an amount is withheld from a Non-Resident Seller of Immovable Property, it is expected that the Non-Resident should submit a return. If a year passes without submitting a return SARS may regard the amount received/payment as a sufficient basis to raise an assessment.

Completion of Application NR03

Completion of application Tax Directive form (NR03)

Particulars of Seller

Complete the following fields for Particulars of Seller

First two names;
Initials;
Surname/Registered Name;
Trading Name;
Income Tax Ref. No;
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Passport issue date (CCYYMMDD);
Company/CC Reg.No,
If you are non-resident, state country of residence.

Physical Address

This is the physical address of the business, i.e. the premises the business is trading from.

If the business is trading from a flat or townhouse, the actual flat or townhouse unit number must be inserted in “unit no”;
The name of the block or the block of flats or townhouse complex must be inserted in “complex”, and
Where the business does not trade from a flat, townhouse or complex these fields are left blank;
Street No;
Street/Name of farm;
Suburb/District;
City/Town; and
Postal code.

Postal Address

This is the address that the business would like its post to be sent to. It may be the same as the business address above or it may be a post box number or other address. If it is the same as the business address simply, mark the relevant box with an “X”.

If the answer is “No”, the following fields will be displayed as open and editable:

Postal Agency or Other Sub-unit (if applicable) (e.g. POSTNET Suite ID);
PO Box: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’.
Private Bag: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Other PO Special Service (specify);
Number;
Post Office;
Postal Code;
Registered Postal Address indicator.

Particulars of Property

Complete the following fields

Date of transaction (CCYYMMDD);
Reason for directive;
Reason for application: Section 35A(2)(a), Section35A(2)(b), Section 35A(2)(d);
Description of property as per Title Deed.

Particulars of Purchaser

Complete the following fields for Particulars of Purchaser

First two names;
Initials;
Surname/Registered Name;
Trading Name;
Income Tax Ref. No;
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Passport issue date (CCYYMMDD);
Company/CC Reg.NO,
If you are non- resident, state country of residence.

Physical Address

This is the physical address of the business, i.e. the premises the business is trading from.

If the business is trading from a flat or townhouse, the actual flat or townhouse unit number must be inserted in “unit no”;
The name of the block or the block of flats or townhouse complex must be inserted in “complex”, and
Where the business does not trade from a flat, townhouse or complex these fields are left blank;
Street no;
Street/Name of farm;
Suburb/District;
City/Town; and
Postal code.

Postal Address

If the answer is “No”, the following fields will be displayed as open and editable:

Postal Agency or Other Sub-unit (if applicable) (e.g. POSTNET Suite ID);
PO Box: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Private Bag: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Other PO Special Service (specify);
Number;
Post Office;
Postal Code;
Registered Postal Address indicator.

Calculation of Amount to be Withheld

Complete the following fields

Gross selling price (only if gross selling price exceeds R2 million);
Percentage on gross selling price (Individuals – 7, 5%; Companies – 10%; Trusts – 15%).

Declaration

After all the information fields have been completed, the applicant is required to complete, print, and sign the declaration on the first page of the application form. Failure to do so will result in the application being rejected.

Tax Directive Approval or Rejection

If the seller is not registered for income tax, SARS will register the seller, for the purposes of the withholding tax.

Once the seller has been registered for income tax, SARS will approve/decline the application according to the requirements as stipulated in Section 35A.

A letter, Tax Directive (NR03) and third Provisional Payment advice (IRP6) will be issued to the Purchaser/Conveyancer/Estate agent informing him/her of the status of the directive application and the amount payable.

Completion and Submission of the Return (NR02)

Completion of the Return (NR02)

Particulars of Seller

Complete the following fields

First two names;
Initials;
Surname/Registered Name;
Trading Name;
Income Tax Ref. No;
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Passport issue date (CCYYMMDD);
Company/CC Reg.NO,
If you are non- resident, state country of residence.

Physical Address

This is the physical address of the business, i.e. the premises the business is trading from.

If the business is trading from a flat or townhouse, the actual flat or townhouse unit number must be inserted in “unit no”;
The name of the block or the block of flats or townhouse complex must be inserted in “complex”, and
Where the business does not trade from a flat, townhouse or complex these fields are left blank;
Street no;
Street/Name of farm;
Suburb/District;
City/Town; and
Postal code.

Postal Address

This is the preferred postal address of the business. It may be the same as the business address above or it may be a post box number or other address. If it is the same as the business address simply, mark the relevant box with an “X”.

If the answer is “No”, the following fields will be displayed as open and editable:

Postal Agency or Other Sub-unit (if applicable) (e.g. POSTNET Suite ID);
PO Box: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Private Bag: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Other PO Special Service (specify);
Number;
Post Office;
Postal Code;
Registered Postal Address indicator.

Description of Property (as per title deed)

Complete the following fields

Description of property as per Title Deed.

Name of Public Officer/Trustee

Complete the following fields

Surname;
Initials;
Date of Birth(CCYYMMDD);
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Income Tax Ref. No;
Passport issue date (CCYYMMDD);

Particulars of Purchaser/Conveyancer/Estate Agent

Complete the following fields

First two names;
Initials;
Surname/Registered Name;
Trading Name;
Income Tax Ref. No;
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Passport issue date (CCYYMMDD);
Company/CC Reg.NO;
If you are non- resident, state country of residence.

Physical Address

This is the physical address of the business, i.e. the premises the business is trading from.

If the business is trading from a flat or townhouse, the actual flat or townhouse unit number must be inserted in “unit no”;
The name of the block or the block of flats or townhouse complex must be inserted in “complex”, and
Where the business does not trade from a flat, townhouse or complex these fields are left blank;
Street no;
Street/Name of farm;
Suburb/District;
City/Town; and
Postal code.

Postal Address

If the answer is “No”, the following fields will be displayed as open and editable:

Postal Agency or Other Sub-unit (if applicable) (e.g. POSTNET Suite ID);
PO Box: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Private Bag: Indicate on the applicable tick box if the postal address is ‘P.O. Box’ or ‘Private Bag’;
Other PO Special Service (specify);
Number;
Post Office;
Postal Code;
Registered Postal Address indicator.

Name of Public Officer/Trustee

Complete the following fields

Surname;
Initials;
Date of Birth(CCYYMMDD);
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Income Tax Ref. No;
Passport issue date (CCYYMMDD);

Name of Conveyancer/Estate Agent

Complete the following fields

Surname;
Initials;
Date of Birth(CCYYMMDD);
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Income Tax Ref. No;
Passport issue date (CCYYMMDD);

Name of Conveyancer Firm/Estate Agency

Complete the following fields

Surname;
Initials;
Date of Birth(CCYYMMDD);
ID No;
Passport No;
Passport Country (e.g. South Africa = ZAF);
Income Tax Ref. No;
Passport issue date (CCYYMMDD);

Calculation of Amount to be Withheld

Complete the following fields

Year of Assessment;
Date(CCYYMMDD);
Receipt number;
Gross selling price(only if gross selling price exceeds R2 million);
Percentage on gross selling price (Individuals – 7, 5%; Companies – 10%; Trusts – 15%).
Interest (from :14 days after payment to seller – To : Date of payment of amount withheld to SARS);
Penalty (10%);
Total payable;

Notes

These are the notes in terms of Section 35A.

Payment Process

If an amount has been withheld from any amount payable in a foreign currency, that amount withheld must be translated to the currency of the Republic (Rand) at the spot rate on the date the amount is paid over to SARS.

The amount withheld by a purchaser must together with a return be submitted to the Commissioner:

Where that purchaser is a resident, within 14 days after the date on which that amount was withheld; or
Where that purchaser is not a resident, within 28 days after the date on which that amount was withheld.
If a Tax Directive (NR03) was issued by SARS, the seller/purchaser/conveyancer/estate Agent will be notified of the amount payable, the Declaration by Purchaser for Sale of Immovable Property in SA by Non-Resident (NR02) must accompany the payment to SARS. For all methods of payments, refer to GEN-PAYM-01-G01 – SARS Payment Rules – External Guide.

Note: For all other tax types, SARS offices will no longer accept any cheque or cash payments. The taxpayer is advised to make payments at the bank. Banks no longer accept cheques exceeding R500 000, based on a decision taken by the Payments Association of South Africa (PASA), which is the association responsible for managing payments within South Africa, and with the endorsement of the South African Reserve Bank (SARB).

If the Seller did not request an NR03 and is registered for Income Tax, the seller will be regarded as a provisional taxpayer. The Purchaser/Conveyancer/Estate agent must submit the third period payment advice (IRP6) in the name of the seller, with the payment to SARS. (Refer to GEN-PAYM-01-G01 – SARS Payment Rules – External Guide).

If a third provisional payment advice (IRP6) was not received with the original letter and Tax Directive (NR03),

the IRP6) can be downloaded from the SARS website: www.sars.gov.za:
- On SARS Home Page >Select Types of Tax;
- Select Provisional Tax;
- Scroll to the bottom of the screen; and
- Below the Top of the Forms tab, select IRP 6 (3) Payment Advice for additional provisional tax.

A payment receipt will be issued to the purchaser/conveyancer/estate agent once the payment is made to SARS.