Tax Law Aspects of Notarial Practice
Tax Law Aspects of Notarial Practice
This domain tests stamp duty, capital gains tax, registration fees and the notary's collection and accounting duties.
Core rules
- The Stamp Duty Act No. 43 of 1982 charges instruments, including conveyances, leases, powers of attorney and affidavits; the notary must ensure the correct duty is paid and stamps are cancelled.
- The Inland Revenue Act No. 24 of 2017 imposes income tax and capital gains tax, including on realisation of investment assets such as land, subject to exemptions.
- Registration fees are payable for registration of deeds; the notary should not register an under-stamped instrument.
- Notarial fees are regulated; the notary must account for duty and fees separately.
Worked example
A parent transfers land to a child by deed of gift. The notary must classify the instrument correctly, calculate stamp duty, consider any capital gains tax exemption and record the transaction. If the deed is undervalued, the tax authority may assess the difference. The reasoning is that the notary's certificate and stamping are part of the instrument's validity and enforceability.
Traps
Under-stamping; using the wrong instrument; failing to cancel stamps; ignoring capital gains tax; and not keeping financial records.