February 5, 2020

For how long can your taxes haunt you?

In terms of section 99 of the Tax Administration Act, 28 of 2011, an assessment may not be made three years after the date of an original assessment by the South African Revenue Service (SARS), or in the case of a self-assessment by a taxpayers (such as in the case of a Value-Added Tax return), five years after the date of an original assessment. These periods are generally referred to as the prescription rules and are in place to ensure that finality is eventually brought to a tax period. Essentially, therefore, the prescription rules provide that tax periods do not […]
September 27, 2019

The different VAT supplies

There are a few instances where VAT is not charged at the standard rate of 15%. In the following newsletter, we distinguished between the different supplies that attract VAT but does not necessarily have the impact of a standard rate supply. Denied Supplies The VAT Act provides for certain expenses where input VAT is denied, even if the expense is incurred in the course of conducting an enterprise and if there are no input VAT consequences there will ultimately be no output VAT consequences. The following circumstances are common instances where input VAT will be denied: Acquisitions of a motor […]
August 27, 2019

SARS dispute: What are the reasons?

Generally, disputes with the South African Revenue Service (SARS) are the result of an assessment which has been issued by SARS to a taxpayer. An assessment is the determination of an amount of a tax liability or refund, by way of self-assessment by the taxpayer (such as in the case of VAT) or assessment by SARS (such as in the case of income tax). If taxpayers are not satisfied with an assessment, the Tax Administration Act provides for dispute resolution mechanisms, in terms of which taxpayers can object to the assessment, and subsequently appeal, if objections are not maintained. Although […]
July 3, 2019

Value-Added remarks on Value-Added Tax (VAT)

VAT is an integral part of our economic society and is something that influences everyone, especially businesses in South Africa.  In this article, we will discuss a few do’s and don’ts regarding VAT. Valid tax invoices In South Africa’s current tax system, vendors that are registered for VAT are allowed a deduction for the tax they pay on eligible goods or services (input tax) from the tax you collect on the sales made (output tax). Tax invoices are therefore very important to vendors as failure to provide valid documentation during VAT audits will cause the vendor to lose all the […]
May 27, 2019

Value-added Remarks on Value-added Tax (VAT)

VAT is an integral part of our economic society and is something that influences everyone, especially businesses in South Africa.  In this article, we will discuss a few do’s and don’ts regarding VAT. Valid tax invoices In South Africa’s current tax system, vendors that are registered for VAT are allowed a deduction for the tax they pay on eligible goods or services (input tax) from the tax you collect on the sales made (output tax). Tax invoices are therefore very important to vendors as failure to provide valid documentation during VAT audits will cause the vendor to lose all the […]
September 18, 2018

BAD DEBTS AND VAT

While there is currently a focus on the income tax considerations of bad and doubtful debts (given that National Treasury has proposed changes to section 11(j) of the Income Tax Act[1] to allow for an allowance of 25% of impairments in respect of doubtful debts), the Value Added Tax (VAT) aspect of bad debts is often overlooked. Section 22 of the Value Added Tax Act[2] determines that a VAT vendor who accounts for VAT on the invoice basis may deduct input tax in respect of debts which have become irrecoverable and written off. To be able to claim the input […]
March 20, 2018

VAT Increase and Accounting Systems

As you are aware, the National Treasury announced an increase in Value Added Tax (VAT) from 14% to 15% effective 1 April 2018.We urge you to ensure that your accounting systems are set up to process transactions at the new VAT rate of 15% from 1 April 2018.  This is to avoid any penalties or interest due to an under declaration or an over claim on your VAT201return. Also note that vendors under Category B (March/April), Category E (annual return) and most farmers registered under Category D VAT reporting periods, will have transactions subject to the VAT rate of 14% […]
February 21, 2018

CLAIMING VAT INPUT ON “PRE-ENTERPRISE” EXPENDITURE

In terms of section 17 of the Value-Added Tax Act, 89 of 1991, a registered VAT vendor is entitled to claim back any amounts of VAT paid on goods and services acquired or imported that will be used in the furtherance of that particular VAT enterprise. The ability to claim input VAT in this manner is however limited to VAT vendors only and the wording of section 17(1) makes it clear that input tax may only be claimed in respect of goods and services supplied to a vendor – in other words, a person that is already a registered vendor […]
December 8, 2017

CLAIMING INPUT TAX FOR VAT PURPOSES ON IMMOVABLE PROPERTY

When a registered VAT vendor sells a property, that transaction is subject to VAT and not to transfer duty.[1] Where the purchaser of the property is itself a VAT vendor, input tax may be claimed against the acquisition price paid for the property, and which will in most instances effectively equate to the VAT charged by the seller-VAT vendor, therefore leaving the purchaser eventually in a VAT neutral position subsequently once the input tax is paid back to it. Where the purchaser-vender however buys immovable property from a non-VAT registered seller, the transaction is not subject to VAT, but rather […]
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