PROPERTY MALL OF AFRICA: A PIPE DREAM BECOMES REALITY - Issue 5 - April 2015 - Moneyweb
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
PROPERTY Issue 5 - April 2015
MALL OF
AFRICA:
A PIPE DREAM
BECOMES
REALITY
ONLINE SHOPPING:
THREAT OR
OPPORTUNITY OPPORTUNITY?
BECKONS FOR
RETAILERS IN LISTED PROPERTY: HOW
AFRICA LONG CAN THE BULL
MARKET CONTINUE?
CONTENTS
EDITOR
Ryk van Niekerk
ryk@moneyweb.co.za
PUBLISHER
Marc Ashton
4. EDITOR’S NOTE marc@moneyweb.co.za
PRODUCTION EDITOR
5. SA’S BRICK & MORTAR RETAILERS SAFE, FOR NOW Eleanor Seggie
CONSUMERS BROWSE ONLINE BUT STILL PREFER TO BUY IN-STORE. Eleanors@moneyweb.co.za
SALES
8. AFRICA RETAIL IS A GOOD BET
Tracy Parsons
SATURATION OF THE SA MARKET DRIVING CAPITAL ACROSS THE CONTINENT. tracyp@moneyweb.co.za
10. MALL OF AFRICA TAKES SHAPE LAYOUT AND DESIGN
Alexis Green
STRONG OFFICE DEVELOPMENTS AT WATERFALL CITY SET TO SUPPORT THE MALL.
alexis@moneyweb.co.za
14. HOW DOES LISTED PROPERTY KEEP ON RUNNING? PHOTOGRAPHER
Desiree Swart
DESPITE THE SLUGGISH ECONOMY.
desirees@moneyweb.co.za
16. INVESTMENT CASE: TOWNSHIP AND RURAL SHOPPING CENTRES CONTRIBUTORS
OPPORTUNITIES FOR LARGE-SCALE CENTRES ARE DRYING UP.
Ray Mahlaka
ray@moneyweb.co.za
18. WHEN IS PAYMENT MADE TO SARS?
TO MEET DEADLINE. Jessica Hubbard
jessica@deathcardmedia.co.za
Patrick Cairns
patrickcairnsmail@gmail.com
APRIL 2015 – PROPERTY MOGUL ISSUE 5 3
EDITOR’S NOTE
FROM
NEWBIE TO
MUST-READ
D
uring the past few months Property Mogul has grown from an innovative
newbie in the property news domain, to a must-read for all related to this
exciting sector.
When Moneyweb published the first edition in September last year,
with generous support from Redefine, our focus was education.
The scope has since then expanded to also include in-depth articles of news events/
trends in the industry.
The response has exceeded all our expectations.
More than 8 500 individuals read the previous edition. Over 80% were from South
Africa and readers spent on average more than 11 minutes reading the publication.
This is a pretty good audience for a very niche product in the digital world.
We are now confident that Property Mogul has made its mark in the industry
and Moneyweb will now increase editorial investment to improve the content and
distribution even further.
There is however a big debate in the Moneyweb newsroom regarding the format
of Mogul. Some love the Joomag format, while others prefer a more rudimentary PDF
version.
As such we are running an experiment this month and will publish our magazine
in both formats. Both formats have their distinct advantages, and of course negatives.
Please look at both and let me know what you prefer.
There are several excellent, mainly retail-focused articles in this edition. Especially
worth noting is Ray Mahlaka’s visit to Waterfall City in Midrand, which is probably
the biggest construction yard in South Africa today. Once completed, it may become
the new Sandton as the dreadful traffic problem in South Africa’s financial capital
drives businesses elsewhere.
Please take the time to send your comments and suggestions to me.
My email address ryk@moneyweb.co.za.
Regards
Ryk van Niekerk
Editor
4 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 5
W
ith data costs tumbling and smartphone However, according to PwC’s Total Retail 2015 report, 81%
SA’S BRICK &
adoption increasing, South Africa is seeing of SA’s online shoppers (and 70% globally) still prefer to do
more people purchasing products online their regular shopping in-store. The top reasons cited by survey
for the first time than almost any other respondents were” to experience merchandise, confirm fit and
developing market. immediate ownership.”
MORTAR RETAILERS
Yet unlike the trend in both the US and Europe, fast-growing “Even in categories where consumers predominantly buy
online shopping isn’t translating into reduced footfall in physical online, some consumers still research online and buy in-store
retail stores. “At the moment, there’s no evidence of any impact – 58% for consumer electronics and 29% for books in South
on actual space in the malls in SA – at least, nothing visible,” Africa (25% and 13% globally),” the report noted.
SAFE, FOR NOW
says independent retail analyst Syd Vianello.
Peter Hoijtink, PwC associate director and retail specialist,
similarly points to the fact that between 2009 and 2014 visits
ONLINE DRIVING OFFLINE SALES
to physical retail stores in the US almost halved. “The impact
Interestingly, some traditional retailers are finding that instead
of online shopping on the amount of square metres in malls
of being a cannibalising force, an attractive online platform can
is quite significant in other countries, such as the US, where
be a powerful complement to physical stores.
the landscape is changing quite rapidly. Locally, there is no real
CONSUMERS BROWSE ONLINE BUT STILL impact being seen yet,” he explains.
There are several explanations, but chiefly the fact that local
The Mr Price Group, whose core market comprises
16-24-year-olds, launched its online platform in 2012. It told
PREFER TO BUY IN-STORE.
PwC analysts that it “is seeing online traffic significantly driving
online retail is still in its infancy. While the sector will be worth
offline sales”, and has enjoyed a “big growth in market share
an estimated R9.5 billion in 2018, online retail currently counts
since launching our online store”. It also noted that the younger
for less than 1% of SA’s total retail revenue. This is according to
generation browses and the older generations transact.
BY JESSICA HUBBARD PwC’s retail and consumer leader, John Wilkinson, who recently
The number of online “browsers” who will mature into
presented the findings of PwC’s annual consumer survey, Total
paying customers will undoubtedly rise exponentially in coming
Retail: Retailers and the Age of Disruption.
years – a shift which will probably require traditional retailers to
Another important factor is the country’s “embedded mall
rethink their approach.
culture,” says Nic Robertson, head of new business development
“With South Africa’s population being so young, the
at Efinity - an e-commerce fulfilment service provider.
adoption of a more socially connected, digital retailing space
“We have 33 (2 000 square metres plus) malls per one million
– where not only a product is sold but the customer receives a
people in South Africa, which is one of the highest densities
memorable experience – is imperative for any retailer looking to
in the world. However, the number of consumers who are
maintain or gain competitive advantage over its competitors,”
beginning their purchasing journey online or via a cellphone
says Hoijtink. ■
is increasing. As an example, between OLX (classifieds) and
PriceCheck (price comparison), one is seeing more than
5 million visitors a month to their sites,” he says.
APRIL 2015 – PROPERTY MOGUL ISSUE 5 7
S
outh Africa’s retail sector is 40 in Nigeria which do not exceed 14 000
AFRICA RETAIL IS A
times the size of all the retail square metres. Its Owerri Mall and Delta
available in sub-Saharan Africa Mall in Imo State are expected to open in
combined, so it is not surprising April and October, respectively. The Benin
that many industry players have been City Mall and Asaba Mall are expected to
GOOD BET
investigating lucrative opportunities be completed in 2016.
north of Limpopo over the last five years. Resilient Africa has agreed to acquire
Figures from the South African sites in Abeokuta, Asaba and Port Harcourt
Council of Shopping Centres suggest that and is also in the process of acquiring four
South Africa has about 21 million square more sites.
metres of retail space. To put this into
SATURATION OF THE SA MARKET DRIVING perspective, retail space in countries like
Kenya, Botswana, Nigeria, Mozambique,
RISKS
CAPITAL ACROSS THE CONTINENT.
Namibia and others do not individually
Despite the obvious retail opportunities,
exceed 400 000 square metres.
Gaddy cautions: “There is a bit more risk
Nigeria, the biggest African economy,
going into these African countries.”
has about 230 000 square metres of retail
Broll Property Group’s divisional
space servicing a population of about
director of research Elaine Wilson explains
170 million.
that some of the pressing risks include
The opportunities are highlighted
property rights, exorbitant land costs, in
when one considers that there is just
some cases corruption and oil-dependent
BY RAY MAHLAKA 500 000 square metres of existing developers and retailers put their heads up countries cutting back on infrastructure
shopping mall space for the total and say ‘I think Africa is probably a good spend due to a slump in international oil
sub-Saharan African population of bet”’. prices.
830 million (excluding South Africa). The JSE-listed property companies She adds that partnerships are important
retail market in these respective countries betting on Africa include Resilient for retail developers.
is still largely informal, often referred to Property Income Fund (Resilient); Delta “A lot of people have burnt their
as ‘the shadow economy’, comprising International; Rockcastle Global Real fingers going into the continent. There are
of makeshift retail markets and small Estate; Hyprop Investments and Attacq centres that have come up to brick height
convenience centres. But these markets Limited (through AttAfrica, a joint [foundations were laid] but have stopped.
are increasingly becoming formalised, venture). You cannot go into any African country
as more large shopping centres are being Sesfikile Capital director Kundayi without having a decent partnership.” ■
established, and developers are coining it. Munzara says the listed property sector
Divisional director of strategic retail has a very low exposure to property assets
leasing at Broll Property Group, Preston in the rest of Africa and a small exposure
Gaddy says developers are, on average, to retail assets in particular.
seeing higher returns on shopping centres “The sector’s overall exposure to direct
that they’re developing in the rest of property assets in the rest of Africa is
Africa, than the typical returns being less than 3%. We have seen companies
achieved locally. concentrating investments largely in four
countries including Zambia, Mozambique
CHASING ECONOMIC and Ghana,” says Munzara.
Outgoing Delta International CEO
GROWTH Louis Schnetler says the company will
target African retail growth. It particularly
The stellar economic growth expected has an appetite for Mozambique and
by some African countries will lead to Morocco.
strong capital inflows. Countries like “We choose the Sandtons [financial
Nigeria, Kenya, Angola, Mozambique, capitals] of each African country. If you
Ghana and Zambia are poised for record look at Casablanca, it is not the capital of
growth north of 5% in 2015, while South Morocco, but Casablanca is the financial
Africa’s economy will be fortunate to capital.” Delta International owns the
grow by 2%. 30 711-square-metre Anfa Place Shopping
The economic growth of neighbouring Centre in Casablanca. “And Maputo
countries opens a window for the [in Mozambique] is easy, that is where
burgeoning middle class who will have everything happens,” he adds.
more disposal income to spend at retailers. Resilient Africa – a joint venture
Gaddy says consumer and economic between Resilient, Standard Bank and
dynamics “has made South African Shoprite – is developing shopping centres
8 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 9
A
pipe dream: that was the consumers over 300 stores and parking The availability of public transport
MALL OF AFRICA
initial investor sentiment bays with a capacity for 6 500 vehicles. services can make or break shopping
towards Atterbury Property’s It is expected that up to 1.3 million centres. As such Atterbury has poured
330 hectare mega mixed-use consumers will frequent the shopping millions into road infrastructure. It has
development Waterfall City, which would centre on a monthly basis. upgraded roads around the Waterfall
TAKES SHAPE
anchor the retail development Mall of Business Estate and is constructing a
Africa. R160 million bridge over the N1
Concerns ranged from whether
GREEN FEATURES highway. The bridge will connect people
Atterbury would have enough capital to to, among others, the Mall of Africa.
see the development through, to whether The mall will also feature A taxi rank on the mall’s basement
the developers had bitten off more than environmental sustainability features. Tia is planned to support the Gautrain bus
routes already dotted across Waterfall
STRONG OFFICE DEVELOPMENTS AT
they could chew. Kanakakis, partner of MDS Architects,
The concerns also centred around which is behind the mall’s design, says a City. Long term, there are opportunities
whether Mall of Africa would see the rainwater harvesting system will supply for the roll-out of the Rea Vaya Bus
WATERFALL CITY SET TO SUPPORT THE light of day. Since Atterbury broke
ground three-and-a-half years ago, the
water to the bathrooms. Photovoltaic
solar panels will be installed on the
Rapid Transit System routes.
As to concerns of sufficient capital,
MALL. 130 000 square metre, two-level, super-
regional mall has started to take shape.
roof, which will be constructed of steel
and glass to allow for natural lighting,
financial director Melt Hamman says
Attacq has about R11 billion in committed
The structure of the R3.2 billion mall, and there will also be LED lighting. debt facilities for the development. ■
located on both sides of the N1 from the
Woodmead interchange to the Allandale
BY RAY MAHLAKA interchange, is on track for its roof
WATERFALL CITY
wetting on April 28 next year.
Van Heerden points to another
Mall of Africa is South Africa’s biggest
unique feature of the mall: it is an infill
single-phase retail development, says
development. This means that it will
director of retail at Atterbury Cobus van
benefit from foot traffic from the existing
Heerden.
commercial and residential space close
“This is the first retail centre to be
by. Its success rests on the development
constructed in one phase while others
of Waterfall City.
have been done in many phases,” says
JSE-listed property development
Van Heerden. Mall of Africa will boast
fund Attacq Limited is now the sole
130 000 square metres of gross lettable
shareholder in the Attacq Waterfall
area and the plan allows for it to increase
Investment Company, which has the
to 150 000 square metres over time.
rights to the Waterfall Business Estate
Described as a rival to Johannesburg’s
development. It also has a shareholding in
Sandton City, the mall already boasts an
Atterbury.
impressive tenant mix of international
December 2014 saw the completion of
fashion retailers, with only a year
211 000 square metres of Waterfall City’s
remaining before its doors open. Some of
1.4 million remaining development bulk.
the international retailers include Cotton
The latter is expected to roll out in the
On, Hennes & Mauritz (H&M), Zara,
next two years.
GAP, Forever New, River Island, Mango,
Overall Waterfall City - which boasts
Lipsy London, Tommy Hilfiger, Express
residential living, office and retail space -
US and Jo Malone London.
is set to be the same size as Sandton and
Atterbury’s Mareli Vorster, responsible
bigger than Johannesburg’s inner CBD.
for leasing at Mall of Africa, says the mall
Already corporates are consolidating
is already 83% let – representing 100 000
in ‘the new CBD’, which Mornè Wilken,
square metres of the total gross lettable
CEO of Attacq, says will have a positive
area.
spin-off for Mall of Africa. Corporates
“We have been picky and we have a
who already call Waterfall City home
very specific idea of who we want and
include Group Five, Cell C, Honda Motor
where. There were sufficient offers on the
South Africa, Premier Foods, Cipla,
table,” says Vorster.
Altech and Golder Associates. Newly
Other retailers include Woolworths,
secured office developments include the
Checkers, Foschini, Stuttafords,
head offices of PwC, Schneider Electric,
Truworths, Mr Price and Edgars, among
Hilti and Stryker.
others. Some of the lease agreements
Century Property Developments is
secured are between five- and ten-
also rolling out private residential estates.
year periods. Mall of Africa will offer
10 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 11
Grant Duncan Smith, subiacophotography.co.za
12 PROPERTY MOGUL ISSUE 5 –APRIL 2015
Asset class total returns
HOW DOES LISTED Period Listed property Listed equities Bonds Cash
PROPERTY KEEP ON
FY 2014 26.64% 10.88% 10.15% 5.90%
Q1 2015 13.69% 5.85% 2.99% 1.53%
RUNNING?
Source: Stanlib
F
or the first quarter of 2015, listed property was once costs are lower,” he says. “In Europe, companies can borrow at
again South Africa’s best performing asset class. This 4% and buy properties yielding 7% or 8%, so it is easier to make
followed 2014, when it delivered a total return more than yield-enhancing acquisitions in the offshore space and those
DESPITE THE SLUGGISH ECONOMY.
twice that of equities. have been boosting returns.”
At current valuations, however, listed property is well out of These fundamentals are supporting the property companies
cheap territory, so investors may wonder how much longer this themselves, but there’s also an important dynamic at play at
bull market can continue. The SA economy is also muddling market level that’s pushing up the prices of listed counters.
through a period of low growth, which one would expect to
BY PATRICK CAIRNS weigh on the returns property companies can generate. “There is just such an appetite for listed property, but there is a
finite number of investable opportunities,” says Evan Jankelowitz
of Sesfikile Capital. “I agree that short-term valuations are
SLOW GROWTH IS NOT NO GROWTH looking expensive, but there is a question of supply and demand
in play that is making investors willing to pay high prices.”
Although the fundamentals of property companies may be
He says that interest in the sector is coming from many
weakening in the current economic climate, they are certainly
different quarters and, given that the local listed property space
not out of control and property analysts aren’t crying off the
remains fairly small, this naturally impacts on what investors
sector.
have to pay.
“If you look at any historic measure, property looks expensive,”
“There is more interest coming from local pension funds
says Nolan Wapenaar, Efficient Select portfolio manager. “But
starting to normalise their allocation to property, from foreigners
… listed property companies themselves keep performing.”
being more active in this space because companies are more
Few companies in the listed property space have missed
liquid and more transparent since the introduction of Real
distribution targets in their last reporting periods - some have
Estate Investment Trusts (REITs), from equity fund managers
exceeded them. It may not be unreasonable to expect this to be
that have been ignoring the property space for so long but can’t
sustainable.
ignore it anymore, and even hedge funds,” he says. “So there is
“For a start, even though the economy is struggling, GDP
excess demand relative to the finite supply.”
growth at 2% is not negative,” says Wapenaar. “If you take
that 2% GDP growth, and add on 6% inflation as a long-term
trend, you are looking at an 8% growth rate for listed property.
If companies can add a few bolts on acquisitions, particularly
MODIFY FUTURE EXPECTATIONS
from abroad, then it’s reasonably plausible for them to sustain
Although property returns were strong in the first quarter
their growth rates.”
of 2015, analysts warn investors to have more reasonable
Property companies also tend to be somewhat shielded from
expectations about what the sector might deliver going forward.
weak economic conditions. This is because tenants tend to be
Over the next five years, the incredible returns we have seen from
locked in to leases of at least three or four years, and particularly
this asset class over the last decade are unlikely to be repeated.
in the retail segment, a trading space is not something given up
However, that doesn’t mean that it’s necessary to be overly
lightly.
cautious. Long term, listed property still remains attractive.
Wapenaar says: “…we are taking the view that you don’t
DIVERSIFICATION PAYING OFF necessarily want to be overweight property, but given the strong
earnings dynamic you can’t afford to be underweight either.” ■
Local property companies have also been very successful
in diversifying their portfolios into other economies. Keillen
Ndlovu, head of listed property funds at Stanlib, says almost 25%
of the assets in the sector are now overseas.
“The fundamentals offshore are much stronger and funding
14 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 15
S
outh Africa’s retail property retail in previously underserviced areas,”
INVESTMENT CASE:
market has focused on shopping Playne explains.
centres in metropolitan areas, with Despite the slower economic growth,
hundreds of large- and small- township and rural shopping centres
scale centres rolled out over the last two continue to perform. According to
TOWNSHIP AND
decades. head of listed property funds at Stanlib
Retail property investors were Keillen Ndlovu these shopping centres
comfortable in this market, given that “have benefited from high foot counts.
they understood the nuances of urban The spend per head is lower than urban
RURAL SHOPPING
consumers and the return was lucrative. shopping centres, but this market is
How dynamics have changed over the volume driven”.
last 14 years. JSE-listed property companies are
The market has reached a point taking advantage of opportunities in
of saturation in metropolitan areas, this market. In 2002, only the Resilient
CENTRES
forcing developers, institutions and Property Income Fund had exposure into
property companies to look elsewhere township and rural centres.
for opportunities. The search is pointing Now Vukile Property Fund (Vukile), “Otherwise, consumers who live 20
towards township and rural areas. Synergy Income Fund (a listed subsidiary kilometres away will drive into town
Township and rural retail developments of Vukile) Dipula Income Fund and to collect their pension or grants, often
are growing. Figures from MSCI Real Rebosis Property Fund are invested in bypassing a centre. So where are they
OPPORTUNITIES FOR LARGE-SCALE Estate and the South African Council this market. going to shop?” Wilson asks.
of Shopping Centres (SACSC) indicate Nodes such as Soweto, Umlazi, Despite the clear opportunities, the
CENTRES ARE DRYING UP.
that about 1.8 million square metres of Mbombela, Giyani, Gugulethu, market does come with risks. Playne
retail space in township and rural areas Khayelitsha, Ulundi, Phuthaditjhaba, says township and rural shopping centres
has been built since 2000, from 405 000 Lephalale, Mahwelereng, Mdantsane are vulnerable to economic disruptions
BY RAY MAHLAKA square metres in the 1990s. and other emerging towns continue to such as job losses. Also securing land or
The combined space in this market see multi-million rand inflows in retail getting it rezoned may pose challenges
now amounts to more than 2.6 million developments. – especially if land is owned by a
square metres. Institutions such as Stanlib, asset municipality or tribal authorities.
manager of the Liberty Property
Portfolio, are also getting in on the act.
GROWTH DRIVERS Stanlib recently announced that it is OPPORTUNITIES
breaking ground on the 21 000 square DRYING UP
Growth has been driven by improving metre Botshabelo Mall in the Free State
economic fundamentals. Head of capital with Khora Investments worth R320 CEO of Vukile Laurence Rapp says
markets at real estate services firm Jones million. Fund manager for the Liberty now is the time to become selective as
Lang LaSalle (JLL), Henry Playne says Property Portfolio Alex Phakathi says this most rural and township retail centre
during the past ten years household is the first Free State development for the opportunities have been exploited.
expenditure has grown, resulting in portfolio, which is set for completion in Rapp – who runs a fund which owns
economic growth. 2016. township and rural centres worth R8.5
From 2004 to 2014 South Africa’s Explaining the investment case for billion including the Dobsonville
average real GDP (adjusted for inflation) Botshabelo, Phakathi says some of the Shopping Centre in Soweto, Phoenix
grew by 3.1% and employment grew over non-metropolitan areas are showing Plaza in Durban, East Rand’s Daveyton
11%, fuelling the growth of the black high growth and “there is still some life Shopping Centre and more – says certain
middle class. remaining”. areas of the market are starting to reach
The appetite for credit also grew, “Some of the markets we have chosen saturation, although this is not as extreme
further driving consumption-led growth are largely undersupplied in terms of as metropolitan areas.
in the economy. Playne says private sector proper and aspirational retail centres. We The opportunities for bigger shopping
credit extension to households increased do find support in terms of demand [and] centres on the scale of the Maponya
by 76% from 2010, but has since slowed there are the right demographics,” he Mall and the Jabulani Mall are gone, says
to 27% in 2014. says. Ndlovu. “Every major township now has
Some consumers targeted by township For developments in township and good shopping facilities with a reasonable
and rural shopping centres depend on the rural areas to become efficient, Broll mix of food, fashion and entertainment.
social grant system, which Playne says Property Group’s divisional director of There is room for shopping centres of
will pay out a “staggering R155 billion research Elaine Wilson says the offering smaller size, with a food anchor or a big
this year”. must be diversified. Wilson says to lure grocery chain.”
“All of these factors have contributed people, retail centres should not only The jury is still out on whether this
to growing household consumption in offer retail amenities, but also social grant market can trump shopping centres in
the economy, encouraging demand for and pension collection points. metropolitan areas. ■
16 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 17
ADVERTORIAL
You see a building
WE SEE
Capital Gains
WHEN IS PAYMENT
MADE TO SARS?
TO MEET DEADLINE
T THE UNCERTAINTY:
he issue:
When are payments legally effected to ensure they In terms of section 162(2) of the Tax Administration Act
meet the statutory deadlines? Clarity on this matter is of 2011, the Commissioner has the right to prescribe the manner
vital importance, as payments or submissions received after their of payment, including electronic payments. However, based on
specified deadlines are marked as late by SARS, and will be liable the principles established by the Supreme Court’s judgement in
for penalties and interest. Stabilpave v SARS (615/12) [2013] ZASCA 128 (26 September
Although the issue is of general application to all SARS 2013). Though dealing with cheques, this judgement implies
payments, this issue was highlighted by the recent SARS that SARS’ right and practice to prescribe the method of payment
communication issued through their website to taxpayers to which the taxpayer must adhere, could result in a transfer of
who made payments or return submissions on 31 March 2015, risk to SARS of the particular payment method. SARS currently
urging them to do so by midday. prescribes various methods of payments i.e. payments via
A question arises as to when payment should be effected eFiling (Credit Push payments); electronic funds transfer (EFT)
by the various prescribed payment methods that would be in and cheque payments at SARS Revenue branches. If it could
compliance with such deadlines. be established that SARS has in fact prescribed the method of
payment, the result would be that payment is effected once the
THE SARS VIEW: taxpayer has complied with the method based on the principle
It appears that SARS is of the view that payment has only been established in Stabilpave v SARS, and not when the payment is
made once the relevant amount is reflected in its bank account honoured by the bank through crediting SARS’ account.
(for example, the SARS External Guide: Provisional Tax, 2015
states at page 13 that “where payments are done electronically, CONCLUSION:
provision must be made for your bank’s cut-off times and for The complexity of the various payment methods as to
a clearance period that could take between two and five days”). when payment is legally effected, may result in an unfair an
Furthermore, in terms of SARS External Guide: Payment Rules, administratively burdensome process for taxpayers if time of
any payment made and placed in a SARS drop box on a business payment is only once payment is received by SARS. For example,
day must be received by 15:00. Where payments are received if the taxpayer makes an EFT payment from the same bank as
after 15:00, this will be deemed to have been received on the first that of SARS, the payment should clear immediately. However,
following business day. SARS views is supported by the courts if payment is made from a different bank, such payment is
i.e. the high court in Bush and Others v B J Kruger Inc and subject to that specific bank’s internal clearing processes, which
Another (2009/36699) [2013] ZAGPJHC 4; [2013] 2 All SA differ from bank to bank and may thus result in timing delays While you see the great architecture of your new building, a CA(SA) can see
148 (GSJ) (8 February 2013) confirms that an EFT is paid when from the time that the EFT payment is effected, to when it how to make room for your new asset during tax season. CAs(SA) have a
received by the recipient - the same as for cheques. actually clears in SARS’ bank account. This will then result in solid foundation of expertise in tax law so that you focus on building your
penalties and interest being imposed by SARS. Legal certainty business, not on tax.
and administrative fairness may inevitably only be achieved by
legislative amendment. ■ Find a tax leader in your area, go to www.findacasa.co.za
18 PROPERTY MOGUL ISSUE 5 –APRIL 2015 APRIL 2015 – PROPERTY MOGUL ISSUE 5 19ARE YOU A
PROPERTY INVESTOR?
FIND OUT MORE ABOUT PROPERTY INVESTMENTS AT THE MONEY EXPO
THE MONEY EXPO 2015
The Sandton Convention Centre
21-22 AUGUST 2015 Free
#MONEYEXPO2015 Entry
!
www.themoneyexpo.co.za
20 PROPERTY MOGUL ISSUE 5 –APRIL 2015
PROMOTE YOUR BUSINESS ALONGSIDEYou can also read
