South Africa's transfer duty regime has undergone significant administrative changes in
recent years, with the South African Revenue Service (SARS) implementing stricter
compliance measures. One of the key developments has been the requirement for tax
numbers of both sellers and purchasers when submitting transfer duty declarations.
Legal Framework
Transfer Duty Act
Transfer duty in South Africa is governed by the Transfer Duty Act 40 of 1949 (TDA). The
Act provides the substantive law regarding the levying of transfer duty on the acquisition of
property. Section 9 of the TDA requires that transfer duty declarations be submitted to SARS,
and over time, the administrative requirements for these declarations have been enhanced.
Tax Administration Act
The Tax Administration Act 28 of 2011 (TAA) provides SARS with broad powers to collect
taxpayer information and enforce compliance. Chapter 3 of the TAA deals with taxpayer
registration and the allocation of tax reference numbers. Section 22 of the TAA makes it an
offense to fail to register for tax when required to do so, and Section 23 requires registered
taxpayers to provide their tax reference numbers when dealing with SARS.
The Tax Number Requirement
Administrative Implementation
While the Transfer Duty Act itself does not explicitly mandate the provision of seller and
purchaser tax numbers, SARS has implemented this requirement through its administrative
processes and electronic filing systems. The eFiling platform, which is the primary method
for submitting transfer duty declarations (Form TDD), requires the input of tax numbers for
both parties to a property transaction.
This requirement aligns with SARS's broader compliance and verification strategy under the
Tax Administration Act. By collecting tax numbers, SARS can:
• Verify the identities of parties to property transactions
• Cross-reference property transactions with income tax returns
• Detect potential tax evasion or non-compliance
• Ensure that capital gains tax obligations are properly tracked
Practical Application
When completing the transfer duty declaration (TDD form), conveyancers and transferring
attorneys must now provide:
1. Purchaser's tax number - The individual or entity acquiring the property must have
a valid South African tax reference number
2. Seller's tax number - The individual or entity disposing of the property must also
provide their tax reference number
For individuals, this is typically their Income Tax Reference Number. For companies, trusts,
and other entities, it is their respective tax reference numbers as issued by SARS.
Implications for Property Transactions
Compliance Obligations
This requirement has several practical implications:
For South African residents: Most economically active individuals and entities should
already have tax numbers, so this requirement primarily serves as a verification mechanism.
For non-residents: Foreign sellers and purchasers may face additional hurdles, as they need
to register with SARS to obtain a tax number, even if they have no other South African tax
obligations. Non-residents can apply for a tax number through the SARS eFiling system or by
submitting the relevant forms to SARS.
For conveyancers: Attorneys handling property transfers must ensure they collect valid tax
numbers from their clients before submitting transfer duty declarations. Failure to provide
valid tax numbers may result in rejections of the declaration or delays in the transfer process.
Registration Process
Parties who do not have tax numbers must register with SARS. This can be done:
• Online through the SARS eFiling platform
• At a SARS branch office
• Through a registered tax practitioner
The registration process requires identity verification and the provision of relevant
documentation such as identity documents, proof of address, and in the case of entities,
registration certificates and founding documents.
Policy Rationale
The requirement for tax numbers in transfer duty declarations is part of SARS's broader
strategy to:
1. Enhance tax compliance: By linking property transactions to tax numbers, SARS
can better monitor whether taxpayers are declaring all their income and assets
2. Combat tax evasion: Property transactions are significant economic events that
should be reflected in taxpayers' affairs
3. Improve data matching: SARS can cross-reference transfer duty declarations with
income tax returns, capital gains tax calculations, and estate duty declarations
4. Streamline administration: Electronic systems with validated tax numbers reduce
processing errors and fraud
This approach is consistent with international best practices in tax administration, where
property registers and tax authorities increasingly share information to ensure compliance.
Conclusion
While the Transfer Duty Act 40 of 1949 provides the legal basis for transfer duty in South
Africa, the requirement for sellers' and purchasers' tax numbers is an administrative measure
implemented by SARS under the authority granted by the Tax Administration Act 28 of 2011.
This requirement reflects modern tax administration practices focused on verification, compliance, and data integration. All parties involved in property transactions in South Africa
should ensure they have valid tax numbers before proceeding with transfers to avoid delays
and compliance issues.
References:
• Transfer Duty Act 40 of 1949
• Tax Administration Act 28 of 2011
• South African Revenue Service (SARS) eFiling requirements and guidelines
• SARS website: www.sars.gov.za
Note: For the most current information and specific guidance on your transaction, it is
advisable to consult with a conveyancing attorney or registered tax practitioner and to review the latest requirements on the SARS website.