Ms A and Another v Commissioner for the South African Revenue Service (IT13974; 13993) [2017] ZATC 15 (24 March 2017)

Ms A and Another v Commissioner for the South African Revenue Service (IT13974; 13993) [2017] ZATC 15 (24 March 2017)

The court held that, although the Sale Agreement reflected a composite purchase price, two different persons acquired two distinct real rights: the bare dominium and the right of habitatio. The absence of separate considerations in the Sale Agreement does not render the contract indivisible for transfer duty purposes. The appellants apportioned the consideration in their transfer duty declarations, and each did not acquire the full property. The contract is divisible, and transfer duty should be assessed on the apportioned values for each right as declared by the appellants. The Commissioner’s assessment on the full composite price was incorrect.

Citation
[2017] ZATC 15
Parties
Appellant: Ms A; Appellant: Mr B; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
24 March 2017
Case Number
IT 13974 & 13993
Procedural Posture
Tax Appeal / Appeal Against Assessment of Transfer Duty
Outcome
Appeal upheld. The appellants' objection against the Commissioner’s assessment succeeds.
Judges
LE GRANGE, DONOVAN BRINDERS, JOACHIM VERMOOTEN
Legal Topics
Transfer Duty, Bare Dominium, Right of Habitatio, Divisibility of Contract, Valuation of Real Rights
Tax Law Transfer Duty Bare Dominium Right of Habitatio Divisibility of Contract Valuation of Real Rights

Case Brief

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Parties

Ms A

Appellant

Mr B

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Appeal Against Assessment of Transfer Duty

Legal Issues

  1. 1 Whether the Sale Agreement constituted two distinct transactions for transfer duty purposes or a single indivisible transaction.
  2. 2 Whether transfer duty should be assessed on the composite purchase price or apportioned between the bare dominium and right of habitatio.
  3. 3 Whether the absence of separate considerations in the Sale Agreement renders the contract indivisible for transfer duty assessment.

Ratio Decidendi

The court held that, although the Sale Agreement reflected a composite purchase price, two different persons acquired two distinct real rights: the bare dominium and the right of habitatio. The absence of separate considerations in the Sale Agreement does not render the contract indivisible for transfer duty purposes. The appellants apportioned the consideration in their transfer duty declarations, and each did not acquire the full property. The contract is divisible, and transfer duty should be assessed on the apportioned values for each right as declared by the appellants. The Commissioner’s assessment on the full composite price was incorrect.

Court Disposition

Appeal upheld. The appellants' objection against the Commissioner’s assessment succeeds.

Orders

  • The appeal succeeds with costs.
  • The appellants are entitled to pay transfer duty on their respective acquired property as calculated in their TD2 declarations.