Online Reporter
Godknows Hofisi
Business Law
I have previously written many articles on Capital Gains Tax (CGT) on the sale of immovable properties.
In this article, I explain the process a conveyancer follows to acquire the CGT clearance certificate from the Zimbabwe Revenue Authority (ZIMRA) on behalf of the seller.
CGT clearance certificate and property transfer
During the transfer of immovable property from the seller (transferor) to the purchaser (transferee), the Deeds Office requires certain key documents to be submitted and these include:
Original current Deed of Transfer (“title deed”) for the property.
New draft Deed of Transfer prepared and signed by the conveyancer.
Identity or registration documents of the seller and the purchaser.
Power to transfer signed by the seller in favour of the conveyancer.
Proof of payment of Stamp Duty by the purchaser or exemption thereof.
Rates clearance from the local authority such as the City of Harare.
Capital Gains Tax (CGT) clearance certificate issued by ZIMRA.
Requirement to pay Capital Gains Tax
In terms of section 30A(1)(a) of the Capital Gains Tax Act (Chapter 23:01), no registration of the acquisition of a specified asset in respect of which capital gains tax is not withheld in terms of Part IIIA (of the Act) shall be executed, attested or registered by the Registrar of Deeds in terms of the Deeds Registries Act (Chapter 20:05) unless there is submitted to the Registrar of Deeds or the person concerned by either of the parties or their agents, concerned in the transaction a certificate issued by the Zimbabwe Revenue Authority stating that any capital gains tax payable on the acquisition of the specified asset has been paid.
According to section 2(1) of the Capital Gains Tax Act (Chapter 23:01), a specified asset means immovable property or any marketable security.
Process followed to obtain a Capital Gains Tax clearance certificate
I have been asked many times by readers or clients to explain to them the process followed to secure a CGT clearance certificate and the timeframes involved. In this article, I gladly explain the process.
Registration in TaRMS
It is a requirement for the seller to be registered for Capital Gains Tax with ZIMRA. If or upon registration, the seller, through the conveyancer, then applies for the CGT clearance certificate as explained below.
Application for the CGT clearance certificate
The conveyancer files a CGT application in the TaRMS system. Information required by ZIMRA includes details of the seller, description of the property sold, and any improvements on the property, date when the property was sold, price, date when the property was acquired, and cost, any improvements made after acquisition, details of the purchaser, etc.
The conveyancer submits several documents required by ZIMRA, including the following:
Current Deed of Transfer (“title deed”)
Current Agreement of Sale
Previous Agreement of Sale
Proof of payment of the purchase price
Identity or registration documents of the seller.
Identity or registration documents of the purchaser
Proof of residence of the seller and the purchaser
Bank statement for the seller
Any other documents as might be requested by ZIMRA, depending on the transaction ZIMRA interviews
ZIMRA will then interview both the seller and the purchaser. This is dreaded by many people for reasons I still do not quite understand.
Some of the questions include the following:
Parties to the transaction.
Description of the property per the Deed of Transfer and also the street address
Size of the property
When the sale was made
Purchase price
How the purchase price was paid, for example, cash or transfer
If there are any outstanding issues between the seller and the purchaser
Person responsible for the payment of CGT
If the seller and purchaser are related
Any improvements on the property
If the seller elects to roll.
Assessment
After the interview, ZIMRA will assess how much CGT the seller has to pay in terms of the laws on CGT, principally the CGT Act.
The CGT assessment is then communicated by ZIMRA to the seller, giving the seller/taxpayer time within which the CGT should be paid, usually one month.
CGT clearance certificate
When the seller has paid the CGT and the payment has been received, ZIMRA will, within a few days, issue the CGT clearance certificate.
The conveyancer then files the CGT clearance certificate with other documents at the Deeds Office for the transfer to be effected from the seller to the purchaser.
Conclusion
The CGT clearance certificate is a key document required for the transfer of a property from the seller to the purchaser. It is obtained from ZIMRA after following due process.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, a chartered accountant, insolvency practitioner, registered tax accountant and advises on deals and transactions. He writes in his personal capacity. He can be contacted on +263 772 246 900 or ghofisi@ hofisilaw.com or gohofisi@ gmail.com.
