Amendment of The Financial Centre Intelligence Centre Act

The Financial Centre Intelligence Centre (hereinafter referred to as ”the Centre”) is in the process of enhancing its operating systems in order to optimize its services.

It is now a requirement that due to an upgrade of the Centre’s website, estate agencies (indeed all accountable institutions) to use the following new forms (which forms are available on the website) when a report is being filed:

1. Suspicious Transactions Report (hereinafter referred to as “STR”)
2. Terrorist Property Report (hereinafter referred to as “:TPR”)
3. Cash Threshold Report (hereinafter referred to as “CTR”).

In addition an estate agency is now required to acquire new login credentials from the Centre in order for the estate agency to file reports in terms of the new systems. Please be advised that your existing log on credentials will expire shortly.

You are therefore advised to visit the Centre’s website: www.fic.gov.za in order to acquire new log on credentials and also to advise the Centre of the name and contact details of the compliance officer duly appointed.

Roll-Out of Cash Threshold Reporting Process
From the 1^st of December 2010 estate agents will be required to file a CTR with the Centre in order for the Centre to monitor cash transactions which can potentially be identified as proceeds of crime in order for the same to be investigated.

Definition of Cash
Cash is defined as coin and/or paper money and travelers’ cheques.

What is excluded from the Definition of Cash?  
Any negotiable instruments, transfer of funds by means of bank cheque, bank draft, electronic funds transfer, wire transfer or other written order that does not involve the physical transfer of cash.

The threshold for reporting is the sum of R25 000, 00 and above. This amount can be made up of a single cost transaction to the value of R25 000, 00 or an aggregation where multiples of smaller amounts would add to the threshold of R25 000, 00.

What is included?

1. Any cash payment received by the estate agent exceeding R25 000, 00 will have to be reported
2. Where an estate agent pays a client physical cash in excess of the threshold this amount will also have to be reported
3. An estate agent will be responsible for reporting cash in excess of R250 000, 00 in the event of the agent receiving cash on behalf of (for instance) a purchaser from a bank or other third parties.

If cash is received into the estate agency’s bank account then the reporting duty is on the estate agent and on the bank as well to report the cash transaction to the Centre.

The reporting duty arises when the agent becomes aware of the cash payment to the value of R25 000, 00 or more, i.e. when the agent physically receives the cash or paid out the cash or it peruses in its bank statement or it receives a bank deposit slip in respect of a cash transaction exceeding R25 000, 00 or more.

Electronic Method
The Centre has developed an electronic process, making use of an internet portal on its website facilitating the filing of a CTR.

Who is required to obtain login credentials?
It is clearly stated that each branch of an estate agency is regarded as a separate accountable institution and is required to acquire separate login credentials from the Centre. For example, if estate agency X has 40 branches throughout the country, then each individual branch will have to acquire separate secure login credentials i.e. 40 different login credentials will have to be acquired.

Should you need any additional information, please do not hesitate to contact the Dykes van Heerden team or alternatively, you can visit the Centre’s website on www.fic.gov.za.

This article has been reprinted with the kind permission of Dykes van Heerden.

Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za

Deeds Office Fees Increase from 01 September 2010

The Deeds Office fees are to increase from 1 September 2010 as set out in the Government Gazette of 27 February (No. 33413 Notice No. R659). These are the fees charged by the Deeds Registry in order to process the actual registration of a Mortgage Bond or Transfer and is levied as a disbursement payable by the Purchaser to the conveyancing attorney who on turn pays it to the Registry. The Deeds Office fees on Transfer and Bonds will be increasing with the exception of Deeds Office fees for Transfer below R150 000,00. The changes will be as follows:

How Are These Fees Changed?

Registration of Transfers	Prior to 01/09/ 2010	After 01/09/2010
Less than R150 000	R70, 00	R70, 00
Above R150 000 not exceeding R300 000	R300, 00	R350, 00
Above R300 000 not exceeding R500 000	R400, 00	R450, 00
Above R500 000 not exceeding R1 000 000	R500, 00	R550, 00
Above R1 000 000 not exceeding R2 000 000	R600, 00	R650, 00
R2 000 000 not exceeding R3 000 000	R800, 00	R850, 00
Above R3 000 000 not exceeding R5 000 000	R1000, 00	R1050, 00
Above R5 000 000	R1200, 00	R1 250, 00

 

Registration of Mortgage Bond	Prior to 01/09/2010	After 01/09/2010
Less than R150 000	R260, 00	R310, 00
Above R150 000 not exceeding R300 000	R300, 00	R350, 00
Above R300 000 not exceeding  R500 000	R400, 00	R450, 00
Above R500 000 not exceeding R1 000 000	R500, 00	R550, 00
Above R1 000 000 not exceeding R2 000 000	R650, 00	R700, 00
R2 000 000 not exceeding R3 000 000	R1000, 00	R1050, 00
Above R5 000 000	R2000, 00	R2050, 00

 

This article has been reprinted with the kind permission of Dykes van Heerden.
Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za

Buying Property in South Africa

South Africa has one of the best Deeds Registries Systems in the world, which makes it very safe to purchase and sell property in this country.

The Estate Agent is involved extensively whilst choosing a property and concluding a Deed of Sale. Once you find a suitable property, the Agent will prepare an Offer to Purchase, which is open for acceptance by the Seller for a certain period of time. The Purchaser is not allowed to withdraw the offer in the stipulated period, and if the offer is accepted by the Seller, it becomes a binding Contract for the sale and purchase of the property.

One of the most important issues for the foreign buyer is the tax implications of purchasing a property in South Africa. The following will be payable on the sale and purchase of the property:

• Transfer duty payable prior to registration, which amount is calculated on the purchase price of the property;
• Property rates and taxes, payable monthly or yearly, which amount is also calculated on the purchase price of the property and a portion of which needs to be paid in advance before registration to obtain rates clearance;
• Capital Gains Tax, calculated on the capital gain or profit once the property is sold. As from 1 September 2007, the Purchaser is liable to pay withholding tax to the Receiver of Revenue on a percentage of the proceeds under certain circumstances.

The purchase of the property can be financed by obtaining a loan from a Financial Institution in South Africa, which loan will be secured by a First Mortgage Bond to be registered over the property when the property is transferred. Due to the Reserve Bank’s exchange control requirements, a foreigner can only obtain a loan for 50% of the value of the property, and not 100% like a South African citizen. If you require such a loan to be able to finance the property, a suspensive condition will be inserted in the contract making the sale of the property subject to the loan being granted. In the event that the application for the loan is unsuccessful, the contract shall expire and become null and void.

Once the contract is finalized, the Seller appoints a Conveyancing Attorney that will attend to the registration of the transfer of the property and the Mortgage Bond. The transfer process in short, involves the following steps:

• Once the suspensive condition is fulfilled and the bond registration instruction is received, the transfer documents and the Bond Documents are drawn for signature by the Seller and the Purchaser. Should you wish to leave the country during this time, it is a good idea to appoint an attorney by means of a Special Power of Attorney to sign the documents on your behalf in order to avoid the strict signature requirements in the event of the document having to be signed outside the country.
• The Bond Cancellation instruction, for the cancellation of the Seller’s Mortgage Bond registered over the property is also applied for at this stage. This instruction will contain the Title Deed of the property, which was held as security by the Financial Institution for the loan that was granted;
• Once the documents are signed and the transfer costs are paid, the Conveyance Attorney will pay the transfer duty and the property rates and taxes required in advance, in order to obtain the transfer duty receipt and the rates clearance;   
• Once the transfer duty receipt, rates clearance, and Bond Cancellation Instruction are received, the Conveyance can draft the new Title Deed in the Purchaser’s name, and the transfer, bond registration and bond cancellation can be lodged in the Deeds Office.
• The Deeds Office process takes 8 to 10 working days, where after the property is registered in the Purchaser’s name.

Steps 1 to 5 take approximately 2 months, but delays can be expected should documents need signature overseas.

As a South African citizen is only allowed to take R2, 000, 000.00 out of the country in a life time, the Conveyance attends to the endorsements of the Title Deed as ” Non Resident ” in the event of a cash transaction before it is delivered to the new Purchaser. This step is taken to expedite the transfer to the proceeds of the sale of the property off shore once the new Purchaser decides to sell the property.

This article has been reprinted with the kind permission of Dykes,Van Heerden.
Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za

Transfer of Property from a Company, CC or Trust into the Name of an Individual

” In the latter part of 2009, Dykes, van Heerden Inc. sent a Newsflash about the window of opportunity which would be opened in regard to the transferring of certain immovable properties from Close Corporations, Companies and Trust to individuals.

They had the pleasure of advising that SARS has now passed the necessary legislation and approved the necessary forms to enable such transfer to now take place.

Due to the large saving on Capital Gains Tax and on dividends tax and STC (secondary taxation on companies), Dykes, van Heerden Inc. strongly suggest that clients who own Close Corporations and Companies which own immovable property make use of the opportunity to transfer such properties to their individual names. In the instance of those clients who own trusts which own immovable property, consideration should also be made as to whether one should take advantage of this window of opportunity although the considerations are less strong in the case of a trust.

In the case of a Close Corporation and Company one saves paying dividends tax or STC and no Capital Gains Tax in paid in respect of the transfer which means that when Capital Gains Tax is eventually paid there will be a large saving in regards to the same. When one considers that the Capital Gains Tax payable by a Company or Close Corporation is 14% whereas the amount payable by an individual is between 0% and 10% one can see the dramatic savings which can be effected in regard to Capital Gains Tax. As dividends tax is presently 10% a further large saving can be effected by utilizing the window of opportunity.

Unfortunately the previsions relate only to certain specified instances and not to all immovable property which is owned by Companies, Close Corporations or Trusts. The following minimum requirements must be presented before such a transfer can take place:

For Companies and Close Corporations

• The transferee (the Purchaser) must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
• The Purchaser together with his/her spouse must directly hold all the share capital of the Company or the member’s interest of the Close Corporation as from the 11th February 2009 to the date of registration of the property into the name of the Purchaser;
• The property must be less than 2 hectares in extent;

For Trusts 

• The Purchaser must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
• The property must be less than 2 hectares in extent;
• The Purchaser is the person who deposed of that residence to the trust by way of a donation, settlement or other disposition or who financed all the expenditure relating to such Property which was actually incurred by the trust to acquire and to improve the residence.

The window of opportunity is available until 31 December 2011.

Normal transfer fees, bond cancellation fees and bond registration fees will apply and one will have to arrange with the necessary financial institution to effectively ” transfer ” the bond from the relevant entity to the natural person who takes over the property.

‘ Please note that this is meant to be a comprehensive exposition on the effects of Section 9(20) of the Transfer Duty, Act 1949 and you are strongly urged to take legal advice before making any decisions in regard to the same. ‘ ”

” In the latter part of 2009, Dykes, van Heerden Inc. sent a Newsflash about the window of opportunity which would be opened in regard to the transferring of certain immovable properties from Close Corporations, Companies and Trust to individuals.

They had the pleasure of advising that SARS has now passed the necessary legislation and approved the necessary forms to enable such transfer to now take place.

Due to the large saving on Capital Gains Tax and on dividends tax and STC (secondary taxation on companies), Dykes, van Heerden Inc. strongly suggest that clients who own Close Corporations and Companies which own immovable property make use of the opportunity to transfer such properties to their individual names. In the instance of those clients who own trusts which own immovable property, consideration should also be made as to whether one should take advantage of this window of opportunity although the considerations are less strong in the case of a trust.

In the case of a Close Corporation and Company one saves paying dividends tax or STC and no Capital Gains Tax in paid in respect of the transfer which means that when Capital Gains Tax is eventually paid there will be a large saving in regards to the same. When one considers that the Capital Gains Tax payable by a Company or Close Corporation is 14% whereas the amount payable by an individual is between 0% and 10% one can see the dramatic savings which can be effected in regard to Capital Gains Tax. As dividends tax is presently 10% a further large saving can be effected by utilizing the window of opportunity.

Unfortunately the previsions relate only to certain specified instances and not to all immovable property which is owned by Companies, Close Corporations or Trusts. The following minimum requirements must be presented before such a transfer can take place:

For Companies and Close Corporations

• The transferee (the Purchaser) must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
• The Purchaser together with his/her spouse must directly hold all the share capital of the Company or the member’s interest of the Close Corporation as from the 11th February 2009 to the date of registration of the property into the name of the Purchaser;
• The property must be less than 2 hectares in extent;

For Trusts 

• The Purchaser must personally and ordinarily have resided in the property since 11 February 2009 and have used it mainly for domestic purposes and will continue to do so until the date of registration of transfer of the property;
• The property must be less than 2 hectares in extent;
• The Purchaser is the person who deposed of that residence to the trust by way of a donation, settlement or other disposition or who financed all the expenditure relating to such Property which was actually incurred by the trust to acquire and to improve the residence.

The window of opportunity is available until 31 December 2011.

Normal transfer fees, bond cancellation fees and bond registration fees will apply and one will have to arrange with the necessary financial institution to effectively ” transfer ” the bond from the relevant entity to the natural person who takes over the property.

‘ Please note that this is meant to be a comprehensive exposition on the effects of Section 9(20) of the Transfer Duty, Act 1949 and you are strongly urged to take legal advice before making any decisions in regard to the same. ‘ ”

This article has been reprinted with the kind pernission of Dykes,Van Heerden.
Tel: (011) 279-5000
Fax: (011) 955-4799
E-mail: info@dykesvanheerden.co.za