South African body corporates have been given some welcome tax relief through the Taxation Laws Amendment Act, which was promulgated by SARS in July of last year.

The Act states that all taxable income received by body corporates, i.e. income other than that derived from levies, will be granted a R50 000 exemption per annum.

According to Martin Bester, Managing Director of Intersect Sectional Title Services, a subsidiary of the Spire Property Group, up till now, taxable income earned by body corporates was subject to taxation at prevailing company rates. This included inter alia interest earned on investments and rental income.

“We have always encouraged the schemes we administer to build healthy cash reserves but these reserves were being eroded by the taxation that was payable on the interest earned. Now that the first R50 000 of such income is exempt from taxation, we are seeing a welcome relief for all schemes.”

”Building cash reserves, to meet unexpected expenses and allow for reasonable contingencies is sound practice.” “At Intersect we ensure that our client’s funds are invested at the best possible rates, whilst ensuring liquidity and, given our membership with the Estate Agency Affairs Board, with fidelity fund cover as well.”

“Interest earned on investments is not the only income that body corporates could earn, they might also derive income from sources such as rentals, and this too will be subject to the exemption.”