Page 13 - Nexia SAB&T Property and Tax Guide 2024

THE PROTECTION OF PERSONAL INFORMATION ACT

◆ The Protection of Personal Information Act (4 of 2013), otherwise known as POPIA, promotes the protection of
personal information by public and private bodies.
◆ The Information Regulator (IR) and its members have been appointed. It is responsible for education,
monitoring, enforcement and compliance, as well as the handling of complaints, performing research and
facilitating cross-border co-operation.
◆ Estate agents, intermediaries, property companies and other institutions conducting business in the property
sector, are required to comply with the Act and its Regulations, which includes obtaining consent from client
before any of their private information is used, and collecting and storing client information in such a way that
only individuals with the necessary authorisation are able to access it. Neither estate agents nor conveyancers
may share a client’s information or pass it on to another organisation or body without the data subject’s
written consent, and have suitable systems and rules in place so as to properly safeguard the client’s personal
information. Estate agents will also not be allowed to hand over the information of tenants and interested
purchasers to landlords and sellers without the necessary policies having been set up and permissions
obtained. A breach may expose the holder of the information to a damages claim, and/or prosecution for a
criminal offence – attracting a possible fine or a period of imprisonment, or both.
◆ The Act sets out 8 conditions which are required to be met for the lawful processing of personal information
of data subjects, as follows: Accountability, Processing Limitation, Purpose Specification, Further Processing
Limitation, Information Quality, Openess, Security Safeguards and Data Subject Participation. Codes of
Conduct may be developed in order to clarify how the 8 conditions are to be applied within a particular Sector
or Profession. The Sector within which Property Practitioners operate may therefore develop their own Codes
of Conduct, service level agreements, as well as amended employment contracts, so as to ensure compliance
with POPIA.
◆ Estate agents will need to be cognisant of the strict limits imposed by POPIA relating to direct marketing. They
will need to obtain the necessary permissions in order to continue communications to clients such as sending
newsletters and campaigns, online marketing, bulk emailing, special offers and latest listings.

TAX IMPLICATIONS ON THE LEASING OF PROPERTY

For the landlord:
◆ All income received from rental of a property is of a revenue nature and has to be declared as part of a
landlord’s gross income.
◆ Deductions are available, such as: interest on bond repayments, repairs and maintenance, municipal rates
and taxes, letting agent’s fees (if applicable), and expenses not recovered from the tenant, such as security,
utilities or garden services. In the case of a sectional title scheme, the levy is also deductible.
◆ In order for the deductions to be allowed the expenditure must have been actually incurred in the production
of income and not be of a capital nature. The landlord must effectively be able to satisfy SARS that he is
carrying on a bona fide trade through the rental of his property.
◆ The cost of improvements, reconstructions or additions to the property cannot be deducted, as these
expenses are of a capital nature. Improvements made to leasehold property in terms of a lease agreement
by the tenant must be included in the income of the landlord. Either the stipulated amount or a fair and
reasonable value will be included. There may be relief available for the landlord, in terms of Section 11(h) of
the Income Tax Act.
For the tenant:
◆ The tenant can claim the rental expense as a deduction for tax purposes if the rental payment or expenditure
was actually incurred in the production of income.
◆ If improvements are made to leasehold property in terms of a lease agreement by the tenant, these must be
included in the income of the landlord. Either the stipulated amount or a fair and reasonable value will be
included.
◆ The tenant may deduct such expenditure over the period of the lease. The landlord may be entitled to discount
the value of the improvements over the period of the lease or 25 years, whichever is the shorter.

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