Buying a share doesn’t avoid the duty

Property deals are often structured as share or members’ interest sales to keep things clean, quick and supposedly transfer duty free. Cue the shocked pause: “ But we didn’t buy the property … we only bought the shares .” Unfortunately, the South African Revenue Service has heard that line before and what looks like a neat paper transaction can still trigger transfer duty. This Alert covers when and why the Transfer Duty Act 40 of 1949 (Act) treats a share acquisition as a taxable property transaction, and how long-term leasehold structures fit into the picture. This is not a new development, the relevant provisions of the Act have been in place for many years but are frequently overlooked in structuring exercises.