This past weekend marked the final date by which South African estate agents were obligated to comply with the SARS third party submission notice issued early last year. The IT3(b) notice compels agents to submit details for all interest earned by tenants, as well as all income generated by landlords as a result of renting out a property.
The IT3(b) notice compels agents to submit details for all interest earned by tenants, as well as all income generated by landlords as a result of renting out a property.
Louw Liebenberg, CEO of PayProp, says if one delves into the 164-page specification document from SARS, it essentially comes down to being able to show per landlord, per month the detailed breakdown of income and expenses.
The notice details that should an estate agent have more than 20 records, then SARS insists that the records be electronically provided directly via their https protocol, requiring individual agencies to build their own reports to the detailed specifications of SARS. “Even the smallest of agencies, handling just ten properties, will have to comply with the new regulations,” says Liebenberg.
Liebenberg says he doesn’t believe that the average estate agency will be able to comply suitably with the regulations from SARS. “The industry is made up largely of businesses that employ fewer than 5 people and don’t have the time or expertise to review the lengthy specification document and comply with the submission requirements, or at the very least, build the report required.”
“I am not convinced that landlords fully understand the implications of the new requirements. In practice, if an estate agent manages to submit the details correctly, then the landlord will see his earnings from his property investments already listed on his tax return. If he had incurred expenses that the estate agent does not know about, then he should record the expenses on his tax return and be able to justify those, should SARS request such justification,” he says.
A further possible unintended consequence could be that landlords who have not been declaring their income will now abandon the use of estate agents because their income stream is becoming visible to the receiver. In the process, the person losing out is the tenant as his rental will then be run in an unregulated market that does not enjoy the same level of oversight and control that trust accounts receive.
After months of development, PayProp is now able to assist estate agents in the delivery of the appropriate submission documents to adequately furnish SARS with the information they require. This service is free to PayProp clients, says Liebenberg.
“This new SARS submission just reiterates once again how hard it is becoming for the individual independent agent to comply with the growing raft of legislative requirements without having a proper administrative backbone.”
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