ALL buyers where the purchase price is R2m or more should now establish whether the seller is a resident or non-resident - not doing so could land you with a hefty liability to SARS.

Tue 14, 08, 2007

ALL buyers where the purchase price is R2m or more should now establish whether the seller is a resident or non-resident - not doing so could land you with a hefty liability to SARS.

If you fail to withhold the tax, you become personally liable for it. Having to double pay between 5% and 10% of the purchase price (the scale varies according to whether the seller is a person, company or trust) will be extremely painful.

It can also be hard to determine whether or not a seller is a "resident" for tax purposes, so you would be well advised to have the sale agreement professionally checked to ensure that it contains clauses to safeguard your position, including-

The seller's written warranty as to his/her/its residence status, and

Authority for your attorneys to withhold the applicable percentage if there is doubt as to what that residence status is, etc. Estate Agents must also be alert to this danger - they are at risk, not only of losing their commission, but also possibly of incurring liability to the parties.