Author Archive

Trusts -Trustees Authority

I see it so many times in practice that clients just assume everything is still in order with their Trust and providing us with a copy of his/her Storage Trust document.

The most popular reason buying in a trust is for estate purposes. Be careful, as many times the funds still come from an individual to fund the transaction and the loan will be recreated in favour of the individual (which will form part of his/her estate) and haven’t kept (Section 7 C of Income Tax Act) in mind where donation tax can be incurred on by the Lender.

RECORDS

Keep records of any changes of the Trust, for example, changing of Trustees, adding of beneficiaries etc. follow the procedure as prescribed in your Trust document.

BANK ACCOUNT

This is important as it is a requirement for a valid trust as well as proper financial records by at least an accountant and no necessarily an audited statement (depending on the type of Trust.

ACTING ON BEHALF OF A TRUST

A trustee can only act on behalf of a trust if he is duly appointed and the Master issued a Letter of Authority. If a Trustee or someone else acts on behalf of a Trust, there must be a resolution signed by all existing Trustees authorizing the person to act on behalf of the Trust and such resolution recording the boundaries of the person’s authorization. If you enter into a contract with a Trust make sure about the above.

 

In short, it is good practise to review your Trust regularly and understand the purpose of the Trust and Tax implications.

 

Every situation is different and therefore if it is pro-active you can avoid unnecessary negative consequences.

For any enquiries please make an appointment at our offices and/or send us an email.

Withholding Tax – Non-Resident Sellers

When immovable property is sold, there is usually capital gains tax applicable which is payable on the proceeds of the sale.

If the property is sold by a Non-Resident, SARS needed to ensure that compliance is ensured and introduced Withholding Tax on the disposal of the immovable property.

Section 35A of the Income Tax Act No 58 of 1962 was inserted and deals with the withholding tax in respect of non-residents who dispose of property in South Africa on or after 01 September 2007. This section imposes an obligation on the Purchaser if the purchase price of the property purchased from the non-resident exceeds R2,000,000.00 (Two Million Rand) to withhold a portion of the purchase price from the seller on registration of transfer and pay this portion to SARS.

Currently, the portion to be withheld is determined as follows:

  • 7.5% where the Seller is a natural person
  • 10% where the Seller is a company, and
  • 15% where the Seller is a trust

A non-resident seller may request a tax directive from SARS before the date of registration of the transfer to request that tax be withheld at a lower or even zero rate. The facts of the particular case will be considered to determine whether the sale would attract a lower rate of Capital Gains Tax, for example, if the property has been disposed of at a loss, or the particular Seller has a low level of taxable income.

Voetstoots and Building Plans

You have finally found your dream home in the right neighbourhood, took the plunge and signed the deed of sale. You cannot wait to move in, but upon inspection of the building plans, you find out that the cosy granny flat that you intended to use as an art studio is not on the building plan. All too often in circumstances such as these, the Purchaser will simply be answered by the Seller with a raised defence of the ‘voetstoots’ clause.

Voetstoots – What you should know

The word “Voetstoots” is Dutch in origin and means “sold as is” or “sold as it stands”. This legal term is for the protection of the Seller against liability for patent or latent defects.

A patent defect is one which is obvious and easily seen with reasonable inspection, like a broken window or crack in the wall. A latent defect is one which is hidden and not easily seen, like a leaking roof or hidden damp.

Neighbour Law – To cut or not to cut that tree?

So your neighbour’s trees are hanging over your wall, now what? Act within your rights.

It is general principle that the Property Owner is entitled to the use and enjoyment of the property provided that such use and enjoyment should not cause unreasonable damage or inconvenience to a neighbour, ie, interferes with his right of use and enjoyment.

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