Output VAT Flashcards by Dirco Bester

What is the “Trigger” of VAT?

According to Section 7(1) it is levied on
1. Supply of goods or services by a vendor in the course of furtherance of an enterpise
2. Import of goods
3. Imported services

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What are Barter transactions?

The exchange for a service or good for another that is not traceable (small amount of cash)

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What are not classified as Goods?

Money except gold coins
Revenue stamps except if you are the collector
Rights arising from a mortgage bond or pledge of goods

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Compulsory registration as a Vendor s23(1)

If a person’s taxable supplies exceeds R1m at the end of any 12 month period
Likely to exceed R1m in a 12 month period
Foreign supplier of electronic services (taxable if supply exceeds R1m)

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What is excluded from taxable supplies for s23(1)?

Value excluding VAT itself
Excludes exempt supplies
Excludes supplies form significant downscaling
Excludes supplies resulting from replacement of capital assets
Excludes supplies from temporary abnormal circumstances

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What is voluntary registration as a Vendor?

A person may voluntarily register for VAT if his taxable supplies exceed or are expected to exceed R50 000 during a 12-month period

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Compulsory registration as a natural person

If they carry more than one enterprise & taxable supplies exceed R1m, then the person has to register not the enterprise

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Compulsory registration as an enterprise

If the enterprise is in separate companies & seen as separate persons (s50A), each must earn > R1m before compulsory registration

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What are the admin requirements to compulsory registration?

Fixed address
Bank Account
Proper accounting records

Within 21 days after required

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Specific inclusions in “Enterprise”

Commencement/Termination of enterprise
Welfare organisation
Foreign donor funded project
Supply of foreign electronic services to a SA resident

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What is excluded from an enterprise?

Supply of services by an employee to their employer
Hobbies
Exempt supplies
Commercial accomodation not exceeding R120 000 in a 12 month period
Certain supplies made by branches or main businesses situated outside SA

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Accounting Basis s15

There are 2 basis available:
1. Invoice basis
2. Payment basis

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The following persons may use the payment basis:

Public authority 7 municipalities
Associations not for gain
Water board & Local electricity distributor
Natural persons who’s total taxable supplies do not exceed > R2,5m in a 12 month period

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Category A Tax period

Two months period ending in uneven (Jan, Mar)

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Category B Tax period

Two months period ending in Even (Feb, Apr)

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Category C Tax period

If value of taxable supplies for a 12 month period > R30m
Vendor applied for category
Classified into category by default by SARS

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Category D Tax period

6 monthly periods ending in Feb/Aug as well as Farming and a value of taxable supplies < R1,5m for a 12-month period

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Category E Tax period

Specific entities who solely earn rental/management fees from connected persons at the end of the YOA

What are zero-rated supplies(s11)?

Direct exports of moveable goods
Exported services

Services rendered outside SA s11(2)(k)

Services rendered outside of SA even if it is to a resident, although electronic services outside of SA is excluded

Services to non-residents s11(2)(l)

Services to a non-resident is zero-rated if the non-resident is not physically present in SA when the service is rendered

Other zero-rated supplies s11

Sale of a going concern to a vendor
Fuel levy goods
Supply of certain agricultural goods
Certain basic foodstuff
Gold coins issued by SARB
Cake wheat flour & white bread flour
Sanitary towels/pads/liners
Municipal property rates

Exempt supplies s12

Financial services excet feeleased services
State educational services & certain approved institutions
Trade Union fees
Supply of orignally donted goods
Transport by road or railway of paying customers and their luggage

When is commercial accomodation a taxable supply?

If the commercial accomodation exceeds R120 000 in a 12 month period
If it is supplied at an all-inclusive rate for a period longer than 28 days, the value of the supply is 60% of the all-inclusive tarrif

Importation of goods s7(1)(b) & s13

* BLSN - countries * Other countries

BLSN - countries Time of supply s13(1)(iii)

When goods enter SA it must be via a designated port

BLSN - countries Value of supply s13(2)(b)

15 / 100 x Customers Value ## Footnote BLSN doesn't levy customs duty between them, only VAT

Other countries Time of supply s13(1)(i)

On the date it was cleared (can be in the warehouse)

Other countries Value of supply s13(2)(a)

15 / 100 x (customs value + 10% of CV + Non-rebated customs duty + Import surcharges) ## Footnote All other countries charge custom duties

Imported services s14

VAT only levied if: * Imported by non-vendor * Imported for use other than for making taxable supplies

Which imported services have no VAT?

* Supply service already subject to VAT @ 15% * Supply if it was within SA it would have been exempt or 0% * Foeign education * Serviice by employee to employer * Service value

No apportionment of Output TAX

Goods & services, acquired by vendor, partially used for making taxable supplies but sells the goods/services so that later VAT is levied on the full amount. ## Footnote Extra Input Tax may be claimed ito s16(3)(h)

Time of supply s9(1)

Important for VAT purposes because it determines when a vendor must account for VAT

What is the general rule of s9(1)

Invoice basis, earlier of: * Date of invoice * Date payment of consideration is received by supplier

Time of supply: Connected persons s9(2)

Recipient & supplier are connected persons

Time of supply: Rental agreements (Commercial)

Goods supplied ito rental agreement, the time of the supply is the earlier of the date * on which payment is due * n which payent is received

Value of Supply

Either: * Amount of money if consideration is in money OR * Open-market value of consideration if consideration is not in money | General rule of Value of Supply

Value of Supply: Connected Persons s10(4)

When vendor supplies goods/services to a connected person for 1. no consideration 2. a consideration hat is < open-market value 3. the connected person would not have been able to claim a full input tax credit THEN consideration of supply is deemed to be its open-market value

Value of Supply: Entertainment s10(21)

When the vendor supplies etertainment & no input tax credit was claimed with the purchase

Value of Supply: Supply @ no consideration s10(23)

Value of Supply: NIL **Supply between connected persons:** sec10(4) Overrides - deemed @ open MV

Deemed supplies: Indemnity payments s8

Where a vendor receives an indemnity payment in terms of an insurance contract, it is deemed to be received in respect of a supply (Only for payments in Money)

Deemed supplies: Supplies to independent branches

If the branch/head office is independent: * Permanently situated outside SA * Can be identified seperately * Has a seperate accounting system THEN Branch/Head office is considered to be a seperate business and the normal VAT rules applies as if importedexported from a third party

Deemed supplies: Fringe benefits s18(3)

The vendor provides employees with a benefit that falls into GI as a fringe benefit to paragraph (i) ## Footnote Fringe benefit is not a taxable, zero-rated or entertainment supply

Deemed supplies: Only 4 fringe benefits

1. Assets given to employees 2. RoU of Assets 3. Services made available to employees 4. RoU of Car