Homeowners Associations to deregister for VAT In the past Home Owners Associations (HOAs) were not exempted from VAT and had to charge VAT on their levies, whereas sectional title body corporates were generally exempt from VAT. SARS is now of the view that the supply of services by an HOA to its members is not a business enterprise but merely a cost sharing arrangement and the law was amended accordingly. As from 1 April 2014 the levies payable by members to HOAs will also be exempt from VAT. However, the effect of this amendment is that many HOAs will have to deregister for VAT purposes as from 1 April 2014 which will have certain financial and administrative implications. In terms of the VAT Act, a person that ceases to be a vendor is deemed to have supplied any goods that form part of the assets of the enterprise immediately before he ceased to be a vendor. HOAs will therefore be required to declare output tax on their assets on hand as at 31 March 2014. However Homeowners Associations to deregister for VAT This VAT Alert is provided by PricewaterhouseCoopers Tax Services (Pty) Ltd for information only, and does not constitute the provision of professional advice of any kind. The information provided herein should not be used as a substitute for consultation with professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all the pertinent facts relevant to your particular situation. No responsibility for loss occasioned to any person acting or refraining from acting as a result of using the information in the VAT Alert can be accepted by PricewaterhouseCoopers Tax Services (Pty) Ltd, PricewaterhouseCoopers Inc or any of the directors, partners, employees, sub-contractors or agents of PricewaterhouseCoopers Tax Services (Pty) Ltd, PricewaterhouseCoopers Inc or any other PwC entity. © 2014 PricewaterhouseCoopers (“PwC”), a South African firm, PwC is part of the PricewaterhouseCoopers International Limited (“PwCIL”) network that consists of separate and independent legal entities that do not act as agents of PwCIL or any other member firm, nor is PwCIL or the separate firms responsible or liable for the acts or omissions of each other in any way. No portion of this document may be reproduced by any process without the written permission of PwC. relief has been provided to HOAs as they can pay over this VAT liability in six equal instalments and not as a lump sum with their final VAT return. HOAs must ensure that they comply with the deregistration procedures and that they file the necessary forms to finalise the deregistration process. Furthermore, HOAs must carefully budget their cash flows to accommodate the final VAT liability on deregistration. Going forward, HOAs should analyse the effect that the exemption that VAT will have on their budgets as input tax charged by suppliers to them will in future not be recoverable, however, it also means that members would not be charged VAT which, in theory, could result in lower levies for members. Region Contact Telephone Email Eastern Cape Mornay Schafer (041) 391 4403 [email protected] Free State, North West, Northern Cape Hettie Koekemoer (051) 503 4207 [email protected] Gauteng Gerard Soverall Bennie Botha Christo Theron (011) 797 5004 (012) 429 0292 (011) 797-4586 [email protected] [email protected] [email protected] Kwazulu Natal Jerry Maharaj (031) 271 2028 [email protected] Mpumalanga, Limpopo Chaha Lakhani (011) 797-4293 [email protected] Western Cape Charles de Wet (021) 529 2377 [email protected]
Posted on: Thu, 30 Jan 2014 05:59:12 +0000
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