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Tax and "unnamed nominees"

10 September 2003

Mr Trevor Manuel mentioned in his Budget Speech in February 2003 that certain property dealers are making increasing use of nominee purchases in order to avoid transfer duty or VAT upon resale. A dealer acquires fixed property on behalf of an "unnamed nominee". The dealer then adds the name when a suitable buyer is found for resale, thereby effectively hiding one taxable transaction. The Receiver of Revenue no longer allows artificial transactions of this kind.

Section 16 of the Transfer Duty Act (40/1949) states that the person acting on behalf of some other person shall disclose the name and address of the principle for whom he acts immediately upon acceptance by the auctioneer of his offer if the sale is by auction, and immediately upon the conclusion of the agreement of sale if the sale is otherwise than by auction. "Immediately" is deemed to mean "the same day". This applies from 1 September 2003.

Transactions prior to this date will be considered on merit. In cases where the property is bought on behalf of a CC or company to be formed, this information must be inserted on the Deed of Sale, and the registration form must accompany the transfer duty transaction in order for this transaction to be accepted. No transactions as "stipulatio alteri" or "principal" of a Trust to be formed will be accepted.

Patrick Maybin
Property Division
Joubert Galpin Searle Inc. Attorneys

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