19 Oct 2009
The annual threshold for VAT was increased from R300k to R1m for "taxable supplies" on 1 March 2009.
According to Martin Bester, regional manager for Intersect Sectional Title Services, a subsidiary of Spire Property Group, this is good news for residential home or property owners associations whose levy income exceeds R300k, but is below the new threshold as they may now opt to deregister for VAT.
"Levies raised on home or property owners associations is deemed a taxable supply by SARS and thus subject to VAT, at the standard rate, in terms of section 7(1)(a) of the VAT tax Act, No. 89 of 1991, therefore, historically, all associations with a levy income exceeding R300k per annum were obliged to register. But in many associations, particularly residential, there is little, if any, material benefit to being registered for VAT and deregistering will reduce the administrative burden on the scheme."
"Furthermore, schemes can also save money as most managing agents charge additional fees for completing the VAT returns and the audit should be less complicated and costly too."
Of course not all home or property owners associations will opt to deregister and Bester advises that the association's appointed auditor would be the best person to direct the trustees and/or directors in this regard, as the net input and output VAT of the association must be considered.
However, from an administrator's point of view, Bester believes that deregistration should be seriously considered.
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