There has been great confusion in the property market whether the exemption provided to bodies corporate and share block companies, in respect of levies and income received by them, must be from the bodies corporate members or from the share block companies shareholders. Furthermore, there was uncertainty whether the exemption limit of R50 000 relates to both the levy and the other income received by the bodies corporate and share block companies from their members and shareholders, respectively.

These issues have now been clarified by the Taxation Laws Amendment Act, 2009. With effect from 1 January 2009, all levies received by bodies corporate and share block companies from their members and shareholders, will be
completely exempt from tax.

Any other income received by the bodies corporate and share block companies from investments, restaurants, other facilities which provide refreshments or sporting facilities, laundry facilities etc, will be exempt from tax, but only to a limit of R50 000. All other income received by the bodies corporate and share block companies, over and above this R50 000 limit, will be subject to tax at the corporate rate. This exemption is applicable to income other than levies received by the bodies corporate or share block companies.

One should never use the words, "tax" and "clarity" in one sentence, but surely this must be an exception to the rule.

Written by: Mathabo Magolego, Associate, Deneys Reitz