Zimra interviews for CGT tax on immovable properties

Transactions involving the sale and purchase of immovable properties are quite common. At the end of the transaction, a purchaser expects to get a deed of transfer (title deed) on the property in his or her name.

Key stages in acquiring title deed
In Zimbabwe, the key stages include those summarised below:
Signing of an agreement of sale by the seller and purchaser.

Payment of the purchase price by the purchaser.
Application for a Capital Gains Tax (CGT) clearance certificate by the conveyancer.

Conveyancer lodging deeds registration papers at the Deeds Registry. In this article I look at an application for CGT clearance certificate, particularly interviews carried out by ZIMRA.

Application for capital gains tax clearance certificate The appointed conveyancer prepares an application for a CGT clearance certificate in the form of a file. The file normally contains the following
documents:
CGT 1 Form (Return for Remittance of Capital Gains Tax).
Rev 1 Form (Application for new registration form).
Supporting documents.
The supporting documents attached usually include those listed below depending on the reason for the transfer or nature of disposal:
Original agreement of sale.
Certified copy of the current deed of transfer (tile deed).
Certified identity cards of the seller and purchaser, if individuals, or their representatives, if juristic persons such as companies or trusts.
For companies, constitutive documents in the form of a certificate of incorporation, CR5 (registered address) and CR6 (register of directors).
For trusts, the trust deed.
Resolutions to sell or buy in the case of juristic persons.
Proof of residence of seller and purchaser.
Bank statements of the seller.
Proof of payment by the purchaser.
I always find it convenient to include a checklist or summary of the documents constituting the application and file them in the order of the checklist. It is also advisable to keep an office copy of the application file for future reference in case there is a query before or during ZIMRA interviews.

ZIMRA interviews for CGT
Many sellers and purchasers are generally reluctant or hesitant to be interviewed by ZIMRA for CGT. They are not sure what will be asked or what they should say, whether ZIMRA will ask about the source of funds, other taxes other than CGT, etc.

The seller and purchaser may go to ZIMRA together with their conveyancer but they are normally interviewed by ZIMRA separately. ZIMRA may also agree to interview seller and purchaser over the phone.

Preparation for the interview
The best is to read and understand the agreement of sale as most questions are based on it. If ZIMRA requires an in-person interview make sure you
carry with you original documents of the copies filed with ZIMRA.

Interview questions
Common questions by ZIMRA include the following issues:
The parties to the transaction. You have to confirm whether you are the seller or purchaser or their representative and ZIMRA usually requires you to
produce your original identity document.

Address of the property. This is as per the agreement of sale and deed of transfer.
Size of the property in square metres or hectares depending on how it is described in the title deed.
Improvements on the property. The property might be a vacant stand. Improvements may include brick under tile, number of bedrooms, lounges,
kitchen, dining, if walled and gated, garage, staff quarters, borehole, etc.
Purchase price.

If the seller and purchaser are related or not, presumably to assess whether the price was arms-length or market related.

Payments made and if there are any outstanding issues.
Who will be responsible for CGT. Normally it is the seller. If it is the purchaser ZIMRA may gross up the purchase price.

If the seller elects any roller over.
Any other relevant questions or information.

Conclusion
ZIMRA is normally friendly and professional. The seller and purchaser should feel free to be interviewed by ZIMRA but the application for CGT has to
be in order.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi
& Partners Commercial Attorneys, chartered accountant, insolvency practitioner,registered tax accountant and advises on deal and
transactions.
He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in
his personal capacity.
He can be contacted on +263 772 246 900 or gohofisi@gmail.com-herald