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Allan White

Allan White

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Wednesday, 24 August 2011 09:55

The “tax amnesty” introduced by SARS (originally Para 51 and now Para 51A of the 8th Schedule of the Income Tax Act) which allows an “amnesty” to homeowners to transfer properties in which they “ordinarily resided” from a CC, Company or Trust, free of transfer duty, capital gains tax and secondary tax on companies, has been written about extensively.

Although there is a little confusion amongst the general public, it can be confirmed that the “amnesty” period for homeowners to use the Para 51A legislation will only expire at the end of December 2012.


There are two important conditions imposed by the current Para 51A in order for you to be able to get the benefits of this type of “tax free” transfer:

  1. You must have “ordinarily resided” in the property and 
  2. You must have used the property for “mainly domestic” purposes.

The “mainly domestic” provision relates to the requirement that you must not have used more than 50% of the property for business purposes.  Simple enough.

However, the requirement that you must have “ordinarily resided” in the property has caused problems since SARS Guidelines have concluded that the property must then have been your “primary residence”. As a result of objection and recommendations, SARS has recognised that this interpretation might be unduly restrictive since this “amnesty” was introduced to all taxpayers to restructure their affairs in the light of changes in the tax laws.


As a consequence, a Taxation laws Amendment Bill has been introduced for public comment which seems to remove the “ordinarily resided” provision, making it possible, if the legislation is approved in its current format, that second dwellings used by family members and holiday homes will also be able to be transferred in terms of the “amnesty”. If the Bill proceeds through Parliament in the normal way, it would likely be passed in October or November 2011.