VAT on Life Right Scheme development

[bammer]

Since the supply is exempt from VAT (in terms of section 12(c) of the VAT Act), VAT incurred in respect of making the supply cannot be claimed as input tax (section 16(3)(a) read with the definition of "input tax").

Also see paragraph 11.5 of VAT 409 - Guide for Fixed Property and Construction http://www.sars.gov.za/AllDocs/OpsDo...al%20Guide.pdf:

"A “right of occupation” in relation to a housing interest, is defined as a right which confers the power to occupy a portion in a housing development scheme for the duration of the lifetime of the purchaser or any other person mentioned in the contract in terms of which the housing interest is acquired, without conferring the power to claim transfer of the ownership of the portion to which the housing interest relates. This is typically found in respect of housing development schemes for retired persons.
The sale and re-sale of the right of occupation under a life right is exempt from VAT."