Non-resident sellers of immovable property

Section 35A of the Income Tax Act[1] came into effect on 1 September 2007 and sets out the capital gains tax consequences of the sale of immovable property situated in South Africa in instances where the seller is not a South African tax resident.

In terms of these provisions, the purchaser of the immovable property is obliged to withhold the specified amount of tax from the purchase price payable, provided that the property is disposed of for an amount in excess of R2 million.

The amount to be withheld in these circumstances is 7.5% of the purchase price where the seller is a natural person, 10% of the purchase price where the seller is a company and 15% of the purchase price where the seller is a trust.

The amount of tax withheld in these circumstances must be paid to the South African Revenue Service (“SARS”) within 14 days after the date on which the amount was so withheld in instances where the purchaser is a South African tax resident. The period is extended to 28 days should the purchaser not be a South African tax resident.

The non-resident seller of the immovable property may, however, request a tax directive from SARS confirming that tax be withheld at a lower or even zero rate, depending on the specific circumstances applicable to that non-resident seller. In this regard, SARS will take into account factors such as any security furnished for the payment of any tax due on the disposal of the immovable property, whether the seller is subject to tax in respect of such disposal and whether the actual tax liability of the non-resident seller is less than the amount to be withheld in terms of section 35A.

In order to request such a tax directive, the non-resident seller must complete the relevant form NR03 and submit this to SARS, together with the offer to purchase, the relevant capital gains tax calculation and all other relevant supporting documentation. According to SARS’ website, the processing of this declaration or directive application is 21 working days.

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

Please note that if the non-resident seller does not submit an income tax 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 section 35A is a sufficient basis for an assessment in terms of section 95 of the Tax Administration Act.[2]

[1] No. 58 of 1962

[2] No. 28 of 2011

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)




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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.