Thoughts Of The Week


Is your profit on bitcoin taxable?

With Bitcoin taking centre stage when it comes to cryptocurrencies, one cannot help but wonder how tax legislation will apply to something that governments have no control over and which exists in cyber space.

SARS’ research department seems to suggest that when Bitcoin comes into the “real world”, it will become subject to ordinary tax rules. Therefore, when proceeds are earned on Bitcoin transactions, one should differentiate between income tax and Capital Gains Tax liability. If there is an intention of a short term investment, then the profit may be treated under the normal income tax rules. However, if Bitcoin is held as an asset for several years, then the rules relating to Capital Gains Tax will apply.

Even more uncertainty clouds the VAT treatment of cryptocurrencies when it is held as trading stock. Current opinion is that VAT will apply and that traders must levy VAT on transactions. It has been argued that SARS is unlikely to introduce a separate tax for cryptocurrency, as the income tax laws are comprehensive enough to be made applicable.

Contact us should you require assistance.

Thinking of eloping or hosting a destination wedding?

Elopements or a ‘wedding for two’ are on the increase and for many it is now the preferred choice. What’s not to love about saying your “I do’s” before a select few on the white sand beaches of Mauritius whilst saving some bucks by incorporating your wedding and honeymoon into the stuff dreams are made of … but is the happy couple aware of the legal consequences of a marriage concluded outside South Africa?

The question whether the couple is legally married, in Mauritius or any other country, depends on whether the marriage procedure of that country was correctly executed and celebrated. But, if their home is still in South Africa, the patrimonial consequences will be determined by South African law and they will be considered married in community of property to each other by default, unless a prenuptial agreement was concluded before the wedding.

Don’t forget to speak to your attorney before you tie the knot!

Drought and your tenant

Many parts of South Africa are experiencing drought conditions on the moment – some mild, others such as in Cape Town, severe.

Lease agreements usually deal in some detail with the obligations of both the landlord and the tenant, but obligations in exceptional circumstances brought about by severe water shortages may not have been addressed. What happens if your tenant uses too much water and the city fines you as the property owner ? Most lease agreements have provisions that stipulate that the tenant must observe current laws and municipal by-laws at all times, and such a transgression will then be for the cost of the tenant. But what if the excessive use relates to damage to the pipes in the leased premises? And how does the water limitations impact on the usual duty placed on a tenant to maintain the premises – garden and swimming pool included?

Clearly, to avoid potential future disputes, it is prudent for landlords and tenants to detail their respective obligations in the current drought, so that there is no uncertainty regarding liability for damages that may arise.

Contact STBB for assistance to make sure your lease agreement addresses the risks and concerns.

Harder times for maintenance defaulters

On 5 January 2018 certain important amendments to the Maintenance Act became operational. These sections introduce stricter measures against maintenance defaulters.

One of the amendments authorises the courts to direct electronic communications service providers, such as Vodacom, MTN, Cell C or Telkom, to furnish the courts with the contact information of the maintenance defaulter where the person cannot be located. In addition, if the complainant (the person applying to court on the basis that a maintenance payment was overdue) cannot afford the cost of the application to the service provider, the costs may be funded by the State. The court may also order the defaulter to refund such costs to the State.

Furthermore, it is now possible for the maintenance officer to furnish the defaulter’s personal particulars to credit bureaus in order for the defaulter to be blacklisted.

For assistance in recovering arrear maintenance, please contact our offices at info@stbb.co.za.

What if the lease is silent on the matter of interest on the deposit?

It often happens that a landlord and tenant’s written or oral agreement omits to mention what should happen to the deposit and the interest that accrued thereon during the lease, on termination thereof.

Perhaps unknown to many, the Rental Housing Act has certain deemed provisions that apply to residential lease agreements, the word ‘deemed’ implicating that the Act’s provisions apply whether or not the parties actually agreed on those terms. Some of these relate to the deposit and interest that accrued thereon. These provide, in short, that although there is no statutory obligation to pay a deposit, where the parties indeed agree on a deposit, it should be applied to make good damage that resulted from the tenancy, if any, and the balance returned to the tenant on termination, within prescribed periods. Pending termination, the deposit must otherwise remain invested in an interest bearing account at a bank, interest accruing for the benefit of the tenant.

The Act contains more details relating to the rate of interest, what the deposit must be used for and the position where an agent acts on behalf of the landlord. You can read more here.

Contact STBB for all your requirements relating to your rights and obligations as landlord or tenant in a lease.

Domestic Workers Wage Increase

The Department of Labour has announced wage increases for all domestic workers (which include gardeners at private homes; persons who look after children, the aged, the sick or the disabled in private homes; and persons employed to drive the children of a household to school). This is effective 1 January 2018 to 30 November 2018.

Those working more than 27 ordinary hours per week:

AreaMetro AreasOther Areas
Hourly RateR13.05R11.89
Weekly RateR587.40R534.91
Monthly RateR2545.22R2317.75

Those working 27 ordinary hours or less per week:

AreaMetro AreasOther Areas
Hourly RateR15.28R14.03
Weekly RateR412.60R378.83
Monthly RateR1787.80R1641.48

For more information, contact James Foxcroft.

Renovation Plans May Introduce Surprises

Whether as the buyer or seller of a property, one is seldom aware of the conditions contained in that property’s registered Title Deed. Generally this is because prospective purchasers never see the relevant Title Deed, as for example, where a property is bonded, the original Title Deed is retained by the mortgage bank.

As a result, purchasers are often disappointed when they wish to improve, alter or renovate their properties, only to find that because of the Title Deed restrictions and conditions, they are not in a position to do so, or that they can only do so after lengthy further applications.

In order to avoid such frustration, we suggest that, prior to presenting an Offer to Purchase to the prospective seller, you contact your STBB conveyancer who will be able to obtain a copy of the Title Deed from the Deeds Office, and advise you on any restrictive conditions which may affect your future plans.

For more information, contact your STBB conveyancer on www.stbb.co.za.

A Useful Tip when To-ing and Fro-ing to Negotiate a Deal

We all know that our law requires that there must be consensus regarding all material terms for a valid agreement to come into effect.

But consider this: Jack makes a written offer to purchase John’s property. John accepts the offer, but at the time of signing, makes some alterations to the document in line with his sale requirements. Can it be said that there is a valid agreement in place?

A similar set of facts presented in the judgment of Cooper v Clark, where the Court referred to two previous SCA judgments. The one concluded that where such change amounts to a material alteration of the contractual terms, it constitutes a counter offer and that until accepted, is unenforceable. The other emphasized that conditional acceptance of an offer does not constitute a contract, but rather a counter offer and would only become a binding contract on acceptance of the alterations.

Clearly any material alteration to a document made by one party after the other has signed, must be accepted by the latter to be enforceable. Make sure that when negotiating a transaction, the written document reflects all the terms of the parties’ agreement and if there are amendments, that each party’s signature is obtained in respect thereof.

For legal assistance in any transaction, contact STBB.

Deposits for Rental Agreements

The Rental Housing Act regulates the relationship between landlords and tenants, sets out certain rules that each must comply with and provides for procedures to be followed in the event of a dispute arising.

One such provision relates to deposits. The Act permits a landlord to request a tenant to pay a deposit before taking occupation of the property. The landlord is then obliged to invest this deposit in an interest-bearing account with a financial institution. On the expiration of the lease, the landlord may apply the deposit and interest towards the payment of all amounts for which the tenant is liable under the lease, including the reasonable cost of repairing damage to the dwelling during the lease period. The balance of the deposit and interest, if any, must then be refunded to the tenant by the landlord not later than 14 days of restoration of the dwelling to the landlord.

A tenant has the right to request the landlord to provide a written receipt reflecting all payments made, as well as written proof of interest earned on the deposit.

For more information or assistance with rental agreements, contact STBB.

The right of first refusal

A simple assumption unleashes unintended chaos

A right of first refusal is an ancillary or collateral agreement whereby one person binds himself to give preference to another person should he or she decide to sell his property.

Most of us have encountered sale or lease agreements with a right of first refusal. These clauses often come in harmless language such as –

The tenant shall have a right of first refusal to purchase the premises when the lessor intends to sell. The purchase price shall be negotiated when the lessor expresses such an intention.

This was the clause, almost verbatim from the recent case of Mokone v Tassos Properties CC 2017 CC. However, rather than being a simple and standard term of the lease agreement, the parties were embroiled in litigation all the way to the Constitutional Court with the tenant attacking the subsequent transfer of the property by the landlord to a third party. Read more here.