Does Home Owners Associations need to apply for tax exceptions, file a IT14 return each year and have to register for VAT if annual turn over exceed R1mil. HOA only receives Levies, but would like to ensure complete tax compliance.
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
In terms of SARS’s current practice generally prevailing, “the qualifying associations of persons referred to in section 10(1)(e)(i)(cc) (for example, home owners’ associations) are required to apply for exemption to the SARS Tax Exemption Unit in order to qualify for exemption from income tax under section 10(1)(e).”
The home owners’ association will, even where it is a company, have to submit an IT12EI.
From 1 April 2014 the exemption under section 12(f) of the Value-Added Tax Act was extended by the insertion of paragraph (iv) to include homeowners’ associations. So, to the extent that a homeowners’ association supplies services to its members and the costs for these services are paid from levy fund contributions received from members, the provision of those services is exempt from VAT.