Output VAT Flashcards
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
What are Barter transactions?
The exchange for a service or good for another that is not traceable (small amount of cash)
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
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)
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
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
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
Compulsory registration as an enterprise
If the enterprise is in separate companies & seen as separate persons (s50A), each must earn > R1m before compulsory registration
What are the admin requirements to compulsory registration?
- Fixed address
- Bank Account
- Proper accounting records
Within 21 days after required
Specific inclusions in “Enterprise”
- Commencement/Termination of enterprise
- Welfare organisation
- Foreign donor funded project
- Supply of foreign electronic services to a SA resident
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
Accounting Basis s15
There are 2 basis available:
1. Invoice basis
2. Payment basis
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
Category A Tax period
Two months period ending in uneven (Jan, Mar)
Category B Tax period
Two months period ending in Even (Feb, Apr)
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
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
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
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)
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<R100
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.
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)
Fringe benefit is not a taxable, zero-rated or entertainment supply
Deemed supplies: Only 4 fringe benefits
- Assets given to employees
- RoU of Assets
- Services made available to employees
- RoU of Car
