As of the beginning of April 2014 residential home owners associations are being treated the same as sectional title bodies corporate, in the eyes of SARS, with regards to VAT.

This is according to Martin Bester, Managing Director of Intersect Sectional Title Services, who explains that section 12 (f) (iv) of the VAT Act was recently added which exempts home owners associations from having to register for VAT, regardless of the associations' gross income received from the levies paid its members.
"Home owners associations (also known as property owners associations) can however voluntarily register as a VAT vendor, specifically if the association is commercial; retail or industrial in nature and where owners can claim input VAT, if they themselves are VAT vendors."

"This also means that home owners associations which are currently registered for VAT may elect to continue as before, if it is felt that there is a benefit to them. Otherwise it would make sense to de-register as a VAT vendor, but remember that there will be a recoupment of any capital input VAT claimed and this would have to be paid over to SARS before the final deregistration takes place.

The schemes' auditors would be best placed to offer such advice," says Bester.