PURCHASE PRICE AND VAT

TO ALL EXTENDED BUSINESS PARTNERS

Number

12/2016
In the case of Gerber v Naidoo and Another 3048/2015 [2016] ZAECPEHC 11 dated 25 February 2016 (case attached for ease of reference) the matter relating to the payment of VAT was once again entertained.
 
The Court held that the Value Added Tax Act 89 of 1991 contemplates that transactions that attract VAT may be concluded on both a VAT inclusive and a VAT exclusive basis, subject upon which the purchase price is quoted.  The obligation to pay VAT on a transaction where VAT is payable rests on the seller and not the purchaser.  In this regard see Strydom v Duvenhage N.O. and Another 1998 (4) SA 1037 SCA at 1043 H - I.
 
The provisions of the VAT legislation, in particular section 64(1) of the Act contains the presumption that any price charged by a vendor is deemed to include VAT.  In this regard see also Huntleigh Hejsani Duncal Manufacturing (Pty) Ltd v Hejsani Wagner Investments CC [2005] JOL 13883 T.
 
Conclusion
From the above it is clear that the purchase price should always include VAT, unless the converse is stated.  However, from a Deeds Registry perspective any consideration reflected in deeds and documents must include VAT.  
 
For any queries please contact our property law division at the details below:

Allen West
Tel: 012 425 3549
awest@macrobert.co.za

Daleen Loubser
Tel: 012 425 3489
dloubser@macrobert.co.za

Disclaimer: This newsflash is for general information only and should not be used as legal or professional advice. No liability can be accepted for any errors or omissions, nor for any loss or damage arising from reliance and any information therein