Updated IN 64 for Body Corporates, Share Block Companies, and Property Associations
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What SARS’ Updated IN 64 Means for
Body corporates, share block companies and homeowners' associations should watch out for the latest SARS Interpretation Note 64 (Issue 5). SARS has updated its rules on who qualifies for tax exemption under section 10(1)(e) of the Income Tax Act.
Background: What is Section 10(1)(e)?
This part of the law gives certain property management bodies a break from paying income tax. It applies to:
Levy income collected from members of a body corporate, share block company, or an association of persons that manages shared property.
Up to R50,000 of other income (like rent or interest).
To qualify, the entity must:
Exist only to manage shared property for its members.
Not be allowed to distribute profits to members (except to another qualifying entity).
If an organisation is involved in tax avoidance schemes, it loses the exemption.
Key Changes in IN 64 (Issue 5)
Here’s what SARS has changed, and what it means for your organisation:
Stricter Requirements for Associations of Persons
SARS has added more detail about how associations (like HOAs) must be set up to qualify:
✅They must be created solely to manage common property.
✅Their founding documents must have specific clauses that SARS requires (like rules about what happens when the association is closed).
What it means: If your HOA doesn’t meet these conditions — or hasn’t formally applied for exemption — it may have to pay tax.
Clearer Rules on What Counts as Levy Income
Only income used to manage shared property counts as exempt levies. SARS now says that the following qualify:
✅General and special levies
✅Building penalty levies
✅Contributions to a levy stabilisation fund
The following do not qualify:
❌Fines or penalties for rule-breaking
❌Interest on late payments
❌Rental or investment income
What it means: You must track and report levy and non-levy income separately. Only levy income is fully tax-exempt. Other income is only exempt up to R50,000.
Associations Must Apply for Exemption
Bodies corporate and share block companies are automatically exempt, but associations of persons must apply to SARS’s Tax Exemption Unit (TEU).
What it means: If your organisation hasn’t applied and been approved, it doesn’t qualify for any exemption.
No Room for Tax Schemes
If the entity is knowingly involved in a plan to reduce or avoid tax, even if another person benefits, the exemption is cancelled.
What it means: Be cautious. Don’t let your organisation be used in tax avoidance schemes.
What Accountants and Admins Should Do Now
Check your clients’ founding documents — make sure they meet SARS’s requirements.
Separate levy and non-levy income in your accounts.
File an application with the TEU if you manage or advise an association of persons.
Watch for schemes that could disqualify your client from exemption.
