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Tax > VAT > Flashcards

VAT Flashcards

1
Q

The invoice basis applies to:

A
  1. All companies

2. All transactions > R100 000

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2
Q

The definition of the invoice basis of VAT is :

A

Recorded at the:
Time of supply
Earlier of invoice or payment date
No regard to delivery date except connected persons & rental agreements

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3
Q

Concerning the invoice basis of VAT, the date of delivery is: (relevant / irrelevant?)

A

Not regarded / irrelevant

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4
Q

Concerning the invoice basis of VAT, input and output VAT is recorded and substantiated when:

A

Input: in possession of an invoice
Output: you issue an invoice

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5
Q

The cash or payments basis of VAT applies to:

A
  1. Natural persons

2. Turnover of > R2,5mil

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6
Q

Concerning the cash or payments basis of VAT, transactions are recorded when:

A

A (cash!) payment is made or received.

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7
Q

Notional VAT on 2nd hand good may be claimed:

A

Notional input VAT when:

  1. The seller is a resident non-vendor
  2. The goods are in the republic
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8
Q

Notional input VAT may only be claimed at the time of:

A

Payment, when payment is made

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9
Q

Requirements for the deduction of 2nd hand goods:
R50+
R1000+

A

R50: date, description, volume, consideration
R1000: photocopy of seller’s ID, letterhead with a reg. number

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10
Q

2nd hand goods: notional input VAT may be claimed on:

A

2nd hand goods
Acquired from a non-vendor
Who is resident in SA
Worse goods are situated in SA

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11
Q

Deemed / notional input VAT on 2nd hand goods is always the lower of:

A
  1. The consideration paid

2. The open market value

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12
Q

Input VAT is defined as:

A

VAT charged to a vendor by a vendor for the goods and services
VAT payable on importation of goods
The tax fraction of 2nd hand goods

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13
Q

The definition of a service specifically excludes:

A

The supply of goods
Money
Stamp, form or card (revenue)

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14
Q

The definition of “goods”:

A 
Corporeal moveable things
Fixed property
Real rights (servitude or usufruct)
Electricity
Goodwill
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15
Q

If an item is not a good as defined, then it is…

A

A service!

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16
Q

A local authority is an enterprise who supplies:

A
  1. Electricity, gas or water
  2. Drainage or removal of sewage or garbage
  3. Same or similar to taxable supplies that may be made by any other person
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17
Q

An enterprise specifically includes:

A
  1. Commercial, financial, industrial, professional services
  2. Farming, fishing, mining, going concerns
  3. Welfare organisations, local authorities
  4. Associations, clubs
  5. Telecommunications
  6. Underwriting (Lloyd’s)
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18
Q

The value of a supply is defined as :

A

The money amount or open market value LESS VAT

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19
Q

An enterprise is defined as:

A

Any activity carried on continuously or regularly
In SA or partly in SA in the course or furtherance where
Goods are sold or services are rendered
For consideration whether for profit or not!

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20
Q

The formula for apportioning input VAT on the turnover basis is:

A

Total value of taxable supplies / x VAT incurred = Input VAT claim
Total value of all supplies

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21
Q

Concerning exempt supplies, accommodation to staff is exempt only if:

A

The recipient is entitled to occupy the property:
1. As a benefit of employment OR
2. The right is limited to the period of employment
(other than for profit making!)

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22
Q

Domestic goods and services include:

A
  1. Cleaning and maintenance
  2. Electricity, gas, AC or heating
  3. Telephone, TV, radio or similar
  4. Furniture and fittings
  5. Meals
  6. Laundry
  7. Nursing services
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23
Q

Output VAT is levied on all of the following:

A

The value of:

  1. The supply of goods / services in SA by a vendor in course or furtherance of an enterprise
  2. Imports: goods (Vendor or not!)
  3. Imports: services (to a non-vendor or a vendor for non-taxable supplies!)
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24
Q

The importation of a service is only subject to VAT when:

A
  1. The importer is not a vendor OR

2. The services are imported for private / exempt purposes

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25
Q

The definition of a service:

A
  1. Anything done or to be done
  2. Granting / assignment / cession / surrender of rights
  3. Making available any facility or advantage
  4. Deemed supplies: Insurance payouts, claims, indemnities
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26
Q

“Supply” includes … but is not …

A
  1. Sales
  2. Rental agreements
  3. Installment credit agreements
  4. All other forms of supply
  5. Any transfer of ownership, possession or use

NOT anything done for nothing!!!

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27
Q

Zero-rated (0%) goods include:

A

Exports including those of 2nd hand goods (input NOT claimed!)
Supply of a going concern
Fuel and fuel levies
Basic foodstuffs: brown bread, mielies, fruit, milk, eggs, legumes
Gold coins

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28
Q

Exempt supplies include:

A

Residential accommodation (during employment, as a benefit, other than profit making!)
Education and crèche
Road / rail transportation (businesses only!)
Financial services
Trade union subscriptions

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29
Q

The definition of goods specifically excludes:

A

Money
Rights under mortgage / pledge
Revenue stamps, forms or cards

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30
Q

Output VAT on capital or private goods:

  1. Capital goods / trading stock
  2. Private goods
A
  1. If used in an enterprise or sold in the course of - levy output
  2. Not enterprise therefor NO VAT!
31
Q

Concerning exempt supplies, how is commercial accommodation different to residential accommodation?

A

Residential accommodation = exempt!
Commercial accommodation = subject to VAT > R60 000 in 12 months
(excluding the letting / hiring thereof)

32
Q

The letting / sale of residential property:

  1. Capital
  2. Trading stock
A
  1. Capital: NOT subject to VAT

2. Trading stock: charge VAT output

33
Q

Input on bad debt:

A

VAT may be claimed if:

  1. Output tax was levied
  2. You have made accounting entry
  3. Ceased recovery action / handed over to an attorney
34
Q

If a bad debt is recovered on which input VAT was claimed:

A

Output VAT is raised on the recovered amount

35
Q

Input VAT on capital goods: claim only the portion…

A

Of Input VAT used to make taxable supplies

LAND, BUILDINGS, MACHINERY, FURNITURE, etc.

36
Q

The treatment of output VAT on importation of:

  1. Goods
  2. Services
A
  1. Output VAT paid whether vendor or not

2. Output VAT paid if the resident non-vendor OR a vendor not using service in taxable supply

37
Q

Registration as a vendor:

Compulsory vs. voluntary

A

Taxable supplies in excess of R1mil in 12 months
Taxable supplies > R50 000 in 12 months
Commercial accommodation > R60 000 in 12 months
Acquired a going concern

38
Q

2nd hand goods:

  1. Definition
  2. Exclusions
A 
Goods previously owned or used
Excludes:
Gold coins
Animals
Prospecting rights
Acquisitions from foreign consulates / missions
39
Q

A motor car is defined as:

A

A motor vehicle, station wagon, minibus, double cab, light delivery vehicle
Normally used on public roads
With 3 or more wheels
Wholly or mainly used for passengers

40
Q

A deemed supply of goods includes:

A

Goodwill
Supply of a going concern
Goods provided to a head office / branch OUTSIDE of SA

41
Q

General characteristics of VAT-type taxes:

A

Apply generally to transactions for goods and services
Proportional to price charged
Charged at each stage of production and distribution process
Vendor may deduct preceding stages
Included in the price

42
Q

Taxable supplies specifically exclude:

A

Salaries & wages
Hobbies and private recreational pursuits
Private sale of personal / domestic items
Exempt supplies
Road accident fund
Commercial accommodation < R60 000
Municipalities

43
Q

Zero-rated (0%) services include:

A

Transport of passengers & goods to export countries OR

International transport services

44
Q

If an input VAT claim is denied, out put VAT…

examples: 3

A

Will NOT be levied

  1. Cars
  2. Entertainment
  3. Exempt supplies
45
Q

The requirements for an input VAT deduction:

A

Goods and services for making taxable supplies

In possession of a valid tax invoice at the time of claiming

46
Q

3 prohibitions on claiming input VAT:

A
  1. Motor cars
  2. Entertainment
  3. Making exempt supplies
47
Q

If goods and services are more (or less) than 95% of all taxable supplies…

A

95%: claim 100%!

48
Q

The input VAT amount is the lesser of…

A

Consideration paid in money OR

The open market value

49
Q

Apportionment: input vs. output VAT:

A

Input VAT: apportion if purchases are for both taxable and exempt supplies
(If paid, a claim in future 5 years is allowed)
Output VAT: NEVER apportion
(Except insurance & fringe benefits)

50
Q

Output VAT: When selling a motor car…

A

No output is levied if you couldn’t claim the input (whether supplied or imported!)

51
Q

The time of supply of an installment credit agreement:

A

The earlier of delivery & 1st payment

52
Q

The effective VAT rate on commercial accommodation is:

A

60% of 14% = 8.4%

53
Q

Fees and subscriptions: input VAT deductions apply:

A

Only if it is a professional body,otherwise no input VAT deduction is allowed!

54
Q

Residential accommodation is exempt if:

A

It is supplied in terms of a agreement of lease

55
Q

Commercial accommodation: > 28 days <

A

28 days:
All-inclusive charge: 60%
Room; domestic services 60% room; 100% services
VAT input is still 100%

56
Q

A tax invoice should include:

A
  1. “Tax invoice”
  2. Name, address and VAT reg # of supplier
  3. Name, address and VAT reg # of recipient
  4. Individual serialized number
  5. Date, description of the goods, quantity / volume
  6. Value + VAT / consideration (incl. VAT @ 14%)
  7. R3000+: trading name of recipient
  8. SA Rands (unless zero-rated!)
57
Q

VAT is usually paid bi-monthly on:

A

The 25th of the month after the end of the VAT period

The last business day of that period for E-filers

58
Q

VAT must be paid monthly if:

A

The value of taxable supplies exceeds R30mil in 12 months

59
Q

The time of supply for rental agreements is:

A

The earlier of rent due or rent paid

60
Q

Where deemed / notional input VAT on 2nd hand goods is claimed, it is the lower of:

A

The consideration paid

The open market value

61
Q

Deemed / notional input VAT on 2nd hand goods:

A

Part of the cost:

Paid R114 = R100 cost and R14 VAT input

62
Q

A building with both commercial and residential space of which more than 50% is taxable:

A

The total value is subject to VAT!

63
Q

A registered vendor will levy VAT on:

A

All taxable supplies, not exempt supplies!

64
Q

Value vs. consideration:

A 
Value = value of supply (excl. VAT)
Consideration = supply + VAT (open market value)

Value + VAT = Consideration

65
Q

Input VAT on motor cars can be claimed where the vendor is:

A

A car dealer
A car hire business
Has acquired the vehicles to award it as a prize

66
Q

To calculate VAT payable:

A

Output VAT: standard rate + zero-rated
- input VAT
= VAT payable

Output > input = tax payable
Input > output = SARS refund

67
Q

Entertainment: treatment of all cases:

A
  1. Entertainment acquired: NO claim!
  2. No apportionment
  3. Employees away on business: claim subsistence expenses
  4. Meals at seminars & cost covers it: claim
  5. Meals as part of transport service: claim
  6. Entertainment as a prize: must have been subject to VAT!
68
Q

Exempt supplies: financial services

Examples

A

Foes, cheques, interest,q life insurance, medical aid, premiums
Service charges are NOT exempt!!!

69
Q

Imported services are defined as:

A

The supply of services made by a supplier outside SA
To a recipient in SA who is NOT a vendor OR
Used or consumed other than for making taxable supplies by a vendor

70
Q

If the recipient of an imported service uses that service to make taxable supplies:

A

Then it is NOT an imported service!!!

71
Q

The definition of entertainment:

A

Provision of food & beverages, amusement or recreation of any kind to anyone in connection with an enterprise carried on by a vendor

72
Q

Motor cars specifically exclude:

A
  1. 1-seater / 1-person vehicles
  2. More than 16-seater vehicles
  3. Vehicles with an unloaded mass of 3500kg
  4. Hearses
  5. Ambulances
  6. Game viewing vehicles
  7. Vehicles incapable of holding passengers

Input VAT CAN be claimed!!!

73
Q 
Standard rate  /   0 Rated /   Exempt supplies
Levy output VAT?
Rate?
Claim input VAT
Rate?
A

Standard rate / 0 Rated / Exempt supplies
Levy output VAT? YES YES NO
Rate? 14% 0% -
Claim input VAT? YES YES NO
Rate? 14% 14% -

Tax (19 decks)

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