Property Practitioners, including Estate Agents, Candidate Estate Agents, and Property Managing Agents (“the Agents”), have for years been regulated by the Estate Agency Affairs Act, 112 of 1976 (“EAA”). However, this is soon to change with the enactment of the Property Practitioners Act, 22 of 2019 (“the Act”), signed into law by President Cyril Ramaphosa, and with an effective commencement date of 01 February 2022.

Relaying the Foundation

The effect of the Act will be the repeal of the EEA, as well as the imposition of some additional red tape for Property Practitioners. From a tax and compliance perspective, this includes the mandatory display of a Fidelity Fund Certificate (“FFC”), which certificate may only be obtained or renewed, by declaration to, and presentation of, a valid Tax Clearance Certificate (“TCC”).

Another important change to note, is that with the repeal of the EAA, comes the name change of the Estate Agency Affairs Board, to the Property Practitioners Regulatory Authority.

In considering the Act, cognizance, must also be had for the Property Practitioner Regulations, 2022, of which, chapter 5, pertaining to the form and deadlines for Property Practitioner Fidelity Fund Certificates (“FCC”), expressly notes that all applications for renewal must be lodged by no later than 31 October in the calendar year in which the current certificate expires.

Structural Integrity Compromised?

In terms of the form of application, regarding the issue of an FFC or Registration Certificate to a Property Practitioner, the Act stipulates the substance and form of the required application, which importantly includes a declaration by the applicant that they are in possession of a valid Tax Clearance Certificate (“TCC”).

A TCC serves as confirmation, issued by the South African Revenue Service (“SARS”), that a taxpayer’s tax affairs are in order, and that they are fully compliant from both a returns/documentary and liability perspective.

What this means for individual taxpayers, such as the Agents, is that all Personal Income Tax annual returns are timeously submitted to SARS, together with any provisional tax return where applicable, with the concomitant liability being settled by the taxpayer in accordance with the SARS provided deadline, as per the respective assessment.

For any corporate taxpayer, including an estate agency, law firm and company of any form, the below filing obligations are applicable to achieve compliance:

• Corporate Income Tax, which is required to be filed 3 times a year, with 2 being provisional tax returns (with an optional top-up), and 1 annual return, which is due within 12 months from the end of the entity’s financial year;
• In the event that there are employees, EMP201s are to be submitted on a monthly basis, corresponding to the applicable withholding taxes. There are also bi-annual reconciliations due to the revenue authority, known as EMP501s; and
• In the event that the annual turnover of the entity exceeds R1 million, Value-Added Tax submissions are due every second month.

SARS Remodels their Compliance Systems

Regarding the TCC and its surrounding compliance elements, it is notable that SARS did, in 2016, move over to a new process, where it issues a Tax Compliance Status (“TCS”).

Under the TCS, the requirements for compliance have remained the same as under the old regime; however, this process is far quicker and allows for regular compliance check-ups on the taxpayer’s SARS e-Filing profile, with “green for go” meaning the taxpayer is fully compliant, as per the below excerpt:

The new and improved TCS system permits 4 varieties of applications as per their respective purposes, being:

• Tender;
• Foreign Investment Allowance; 
• Good Standing; and
• Emigration.

For the purposes of the Act, which even though expressly mentioned the TCC, the applicable TCS application would be that of “Good Standing”. This application will then provide the taxpayer with a PIN, which a 3rdparty may use to verify the taxpayer’s status via the online platform of SARS e-Filing on an on-going basis, and which status will change in accordance with the taxpayer’s current state of affairs.

The Fixer-Upper

Any historic or current non-compliance, must immediately be remedied with SARS, which includes:

1. Outstanding tax returns;
2. Money owed to SARS, which liability is not subject to a Suspension of Payment, Deferral of Payment, or Compromise of Tax Debt Application;
3. Outstanding or Deficient registrations for applicable tax types; and
4. Outdated registered information.

The knock-on effect of non-compliance with SARS can be far reaching, affecting not only the careers of the Agents, but also their personal lives should SARS opt to implement any collection measures against them, taking the form of 3rd Party Appointments, Final Demands, or in exceptional circumstances, Garnishee Orders.

It must be noted that now is not the time to take risks. SARS’ approach clearly shows we are dealing with a competent revenue authority, which with the implementation of AI system improvements and the additional power imputed by teaming up with the National Prosecution Authority, is fast gaining momentum in its collection drive.

The First-Mover Advantage

To protect yourself from SARS and abide by the soon to commence Property Practitioner Act and Regulations, it remains the best strategy that you always ensure compliance. Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory assistance to ensure the necessary steps are taken to protect both yourself and your real estate career from paying the price for what could be the smallest of mistakes. However, where things do go wrong, SARS must be engaged legally. We generally find them to be agreeable to the utmost where a correct tax strategy is followed.

All correspondence received from SARS should be immediately addressed by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but the taxpayer will also be correctly advised on the most appropriate solution to ensure their tax compliance.

Written by Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting SA