chapter 2

Question 1

What is VAT?

Answer 1

Value Added Tax, introduced in 1991 at 10 and is at 15% since 2018

Question 2

What are zero-rated goods?

Answer 2

Goods that have 0% VAT with the intention of alleviating poverty, usually taxed on foodstuffs, e.g., petrol, sanitary pads, exports when the company is responsible for delivery, the sale of business as a going concern, or any welfare service.

Question 3

VAT exempt goods

Answer 3

no VAT charged, Life assurance, renting a private dwelling, passenger transport, donated goods or services.

Question 4

non-allowable items

Answer 4

1. entertainment goods
2. passenger transportation used by the company
3. club fees and subscription

Question 5

what are the two basis a company can register for VAT and why should they

Answer 5

payment basis: turnover less than 2.5 million; pay VAT before the output VAT is received
invoice basis: better flow of funds, thus only paying tax after receiving input VAT

Question 5

what source document is required for taxation when supply total exceeds R5000

Answer 5

full tax invoice

Question 5

What is a full tax invoice composed of?

Answer 5

1. details of the seller
2. details of the buyer
3. the quantity of the product
4. the description of the product
5. settlement terms
6. the amounts
7. Taxation number
8. date

Question 6

What document is required for tax when the amount is less than R50?

Answer 6

cash slip, petty cash voucher

Question 7

What document is required for tax when the amount is higher than R50 but less than R5000?

Answer 7

an abridged tax invoice