Tax and SARS knowledge base
How does a non-resident property seller apply for an NR03 directive?
How does a non-resident property seller apply for an NR03 directive?
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Direct answer
A non-resident seller can apply to SARS for an NR03 tax directive before a South African immovable-property sale completes. SARS says the directive can ask that no amount be withheld or that the amount be reduced where security is furnished for tax due, the seller is not subject to tax on the disposal, or the seller's actual tax liability is lower than the standard withholding amount. The seller or representative completes NR03; the purchaser-side NR02 remains a separate declaration.
This is not a request to waive tax merely because withholding affects cash flow. It is a request for SARS to determine the withholding treatment on the facts supplied. Submit it early and do not release funds on the assumption that a directive will be issued.
What this means in practice
The default section 35A withholding can be significant because SARS's published rates are 7.5% for a natural person, 10% for a company and 15% for a trust, applied to the full purchase price where the R2 million threshold is exceeded. The withheld amount is an advance against the seller's normal-tax liability, not necessarily final tax. An NR03 directive is therefore particularly relevant where the actual tax liability is expected to be materially lower than the amount calculated using the standard percentage.
The application needs to fit the sale file. The seller, purchaser, property description, price, dates and tax references should be consistent across the NR03, sale agreement, transfer documents and any supporting schedules. A conveyancer should coordinate timing, but the seller and tax adviser are responsible for the tax facts and the basis on which relief is sought.
Step-by-step
- Confirm that the seller is non-resident for the relevant purpose and that the property is South African immovable property. Ask for advice if this is disputed.
- Confirm the aggregate amounts payable and whether the R2 million threshold is exceeded. SARS says that where it is exceeded, withholding applies to the full purchase price absent a directive.
- Decide the grounds for the NR03 request. SARS identifies security for tax, no tax liability on the disposal, or actual liability lower than the standard calculated withholding as the bases for relief.
- Obtain the current NR03 from SARS. Complete all mandatory seller, property, purchaser and transaction fields accurately. SARS's guide lists identification, tax-reference, residency-country, address, property, transaction-date and reason-for-directive information.
- Attach the deed of sale and the documents needed to explain the calculation or grounds. Keep the evidence focused and reconcile any figures to the sale agreement.
- Submit NR03 using the current SARS process. SARS's guide says the seller, purchaser, conveyancer, estate agent or representative can obtain the forms and that the application and deed of sale are submitted through the stated channel. Verify the live instructions immediately before sending.
- Keep the acknowledgement and do not assume a directive is granted just because it has been submitted. SARS states a processing time of 21 business days for the directive application or return, so build this into the transfer timetable.
- On receipt, give the directive to the conveyancer and purchaser-side team. Follow the directive exactly and retain it with the NR02, transfer-duty records and proof of payment.
Documents and records to keep
- Signed sale agreement and property description from the title deed.
- NR03, supporting calculations and source records for the requested relief.
- Seller residency and tax-registration information.
- SARS acknowledgement, directive or rejection letter.
- NR02, transfer-duty correspondence and payment evidence.
Important limits and exceptions
An NR03 directive is not a final assessment of the seller's tax position. The seller must still deal with the relevant normal-tax return and any actual tax liability for the year of disposal. SARS also notes that it can register an unregistered seller for income-tax purposes in this process.
Do not substitute an NR03 for the purchaser-side NR02 or ignore the conveyancing process. The forms have different roles, and the transfer-duty receipt process can require the relevant form and deed of sale to be uploaded.
When to get tailored advice
Get specialist advice before applying where the seller is a trust or company, the gain calculation is complex, there is uncertainty about tax residence, or the transfer deadline is near. The amount at stake and statutory duties justify early coordination between tax adviser and conveyancer.