1 - VAT Basics Flashcards
which section contains the tax periods for vendors?
section 27
which section contains rules for branches, individuals and independence?
section 50
what is the anti-avoidance provision?
s50A
- this provision prevents an individual from splitting up one business that qualifies to be a vendor into multiple, as the commissioner will deem this individual to be carrying out a single enterprise and require them to register
what are the requirements for output tax to be charged?
1) supply
2) goods or services
3) vendor who supplies
4) in course of their enterprise
5) taxable supply
what is the definition of an enterprise?
an activity carried out continuously/regularly where g/s are supplied to any other person for a consideration
which activities are specifically included into the enterprise definition?
- supply of electronic services by a non-res
- activities of intermediary
which items are excluded from enterprise definition?
- employment
- hobbies/private activities not conducted as business
- commercial accommodation
- making exempt supplies
general time of supply for output tax items?
s9(1) - at the earlier of
- invoice is issued
- that payment (or part thereof) of consideration is received
general value of supply for output tax items?
s10(2) - consideration
what is included in the consideration?
- deposits are not included in the consideration amount unless it is applied (to reduce purchase price) or if it is forfeited
- if in money = money amount
- if not in money = OMV
what are the requirements for an input tax deduction?
1) vendor buys goods
2) output vat was charged ito s7 and must have been incurred by vendor
3) acquired for wholly/partly taxable supplies
what does a vendor need to claim input tax?
documentary proof such as a tax invoice or debit/credit note
who can input tax be claimed from?
- vendor = all supplies
- non-vendor = only secondhand goods
what are the time and value of input tax deductions for secondhand goods?
- lower of consideration and OMV
- to the extent of payment
what are the rules for apportionment of input tax?
s17(1) - may only claim to the extent that g/s are acquired for taxable supplies:
- if wholly = full
- if >95%, full deduction as per the De-minimus rule
- <95%, partial deduction based on turnover apportionment method
what is the apportionment ratio?
u = a / a+b+c
a = value of taxable supplies (excl.VAT)
b = value of exempt supplies
c = any other amounts
which section relates to input tax denied items?
s17(2)
which items are input tax denied?
- entertainment
- motor cars
- membership fees and subscriptions
what are the exceptions to the input tax denial of entertainment?
- if acquired in ordinary course of enterprise and supplied at a charge of at least cost/OMV
- if acquired and supplied to an employee/connected person who covers the cost
- if related to a meal/accommodation enjoyed by a vendor/employee if they spend at least one night away from their usual place of work for business purposes
how does the input tax denial work for membership fees?
- any fees paid in respect of clubs, associations (soccer/country club). does not include amts paid to professional bodies.
which items meet the definition of a motor vehicle?
- station wagon
- minibus
- motor vehicle with 3+ wheels, made to mainly carry passengers
- motor car
- double cab delivery vehicle
which items do NOT meet the definition of a motor vehicle?
vehicles which:
- accommodate 1 or more than 16 persons
- weigh >3500kg
- caravans, ambulances
- purpose other than carrying persons
- hearses
what exceptions are there for items which meet the motor car definition?
- acquired as taxable supply for sale/rental
- demonstration/temporary use
- prize
what are the two accounting bases for VAT?
- payment basis = VAT is accounted for to the extent that payment is received or made; vendor must apply in writing
- invoice basis = default; VAT is accounted for transaction is deemed to occur
which amounts are inclusive of VAT?
consideration
open market value
which amounts are exclusive of VAT?
market value
SOCI amounts
CDV
what is the tax fraction?
15/115
what is the TOS for input tax?
s9(1) - at the earlier of
- time invoice is issued
- time that payment (or part thereof) of consideration is received
what is the VOS for input tax?
s10(2) - consideration
