Tax Realty Consultant

Accordingly, clients need to be both patient and accommodating when their agent requests answers and documentation to support a transaction, says Mike Bester, CEO of Realty 1 International Property Group.

Yet, he adds, agents and consumers are often in the dark when it comes to identifying just what behaviour should be reported to the country’s Financial Intelligence Centre.

This lack of understanding raises the likelihood of erroneous and accordingly time-wasting reports being submitted to the Centre or alternatively, people failing to report behaviour that warrants it, he points out. And what makes it even more confusing is that while transac­tions may sometimes seem unusual, they are not necessarily suspicious.

Aware of the need for further clarity in this arena of real estate operation, Bester’s advice is for agents and slients to stick to the facts.

He also advocates taking a look at the FICA website, which lists a number of examples of suspicious or unusual behaviour. These include:

.The purchase price being paid into a foreign bank account, which could indicate a violation of exchange controls or an attempt to evade paying tax.

.The purchase price being paid in cash with little to support where the money came from.

.Properties being over-valued since 1 October 2001 for the purposes of evading Capital Gains Tax (CGT).

.The unrealistic splitting of the purchase price between moveable and immovable property.

.Selling a business and presenting one set of books to Receiver of Revenue while keeping back another reflecting the actual worth of the business

.Not being able to reconcile a purchaser’s affordability with the kind of job he does and his resultant earnings. “This begs an answer to the question of how the purchaser can afford to buy a property that is apparently beyond his financial ability,” notes Bester.

Also significant is a prospective purchaser depositing a large sum of money into an estate agency’s trust account, ostensibly to serve as a deposit for the purchase of additional property. Bester says a warning flag should go up when the money is withdrawn shortly afterwards, owing to a “change of heart” by the buyer.

Other actions that would warrant closer investigation include the purchase price being paid by an unidentified third party; the name of the purchaser being changed just before the transaction is concluded; and the purchaser concluding the deal without inspecting the property.

“Also watch out for instances where the purchaser insists that the property be registered in the name of an unrelated third party,” he continues.

According to the Financial Intelligence Centre Act, reports should be submitted within 15 days of suspicion arising, a period which excludes weekends and public holidays. The Act permits the transaction to continue after the report has been made unless the Centre directs otherwise. A report may even be submitted after a transaction has been concluded, which covers the eventuality of new facts arising and casting suspicion over what was originally perceived to be a legitimate deal.

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