VAT 2

Question 1

Deemed Supply

Answer 1

1. 1 Fringe benefits
2. 2 Cessation of business
3. 3 Indemnity payments
4. 4 Excess payments

Question 2

Denied Input VAT

Answer 2

2. 1 Entertainment
3. 2 Club Subscriptions
4. 3 Motor Car

Question 3

Fringe Benefits :

Includes

Answer 3

Assets given
Private right of use of assets
Services for private use

Question 4

Fringe Benefits :

excludes

Answer 4

Cash Benefits
Share Benefits
Exempt Supplies
Zero Rated Supplies
Entertainment

Question 5

Are these Fringe benefits 
• Cash allowances?
• Subsidies
• Long service awards - cash
• Long service awards – assets?
• Supply of meals
• Supply of housing
• Low interest rate loan?
• Share incentive scheme?
• Paying an employee’s debt?
• Pension fund and medical aid contributions?
• Supply of a motor vehicle at less than market value?

Answer 5

• only Long service awards – assets is a Fringe benefit

- Supply of a motor vehicle at less than market value? -depends

Question 6

Fringe benefits s18(3)

• Time of supply s9(7)

Answer 6

– End of month in which benefit is granted
– However, if in terms of 7th Schedule it’s not
required to be concluded monthly, then at the
end of the year of assessment of the
employee.

Question 7

Fringe benefits s18(3)

Value of supply s10(13)

Answer 7

– Consideration is the cash equivalent value
as per the 7th schedule, except for right of use
of a motor vehicle.

Question 8

how Fringe benefits s18(3) for Use of motor vehicle is calculated

Answer 8

Use of motor vehicle
1. Determined value:
- ALWAYS excluding VAT, even if input VAT was
denied
- Excluding Finance Charges
- 15% diminishing value
2. Multiply by Fraction to get MONTHLY consideration
– 0,3% (if input tax deduction was denied) OR
– 0,6% (if input tax deduction was not denied)
3.Less Reductions (See next slide)
4. x number of months
5. Multiply by Tax Fraction to get MONTHLY output tax.
6. Apportion for taxable use (To be discussed later)

Question 9

Situations that can exist with motor vehicle

Answer 9

1. Employee pays consideration for
right of use or Employee does not pay consideration for
right of use
2. Employee bears full cost of:
- Repairs, and
- Maintenance
3. Employer claimed
input tax on acquisition or Employer’s input
tax was denied

Question 10

Situation 1 
Employee does NOT pay
consideration AND
Employee bears full cost of:
- Repairs, and
- Maintenance

What is deductions allowed against MONTHLY consideration?

Answer 10

R85

Question 11

Situation 2
Employee pays consideration for
right of use AND Employer claimed
input tax on acquisition

What is deductions allowed against MONTHLY consideration?

Answer 11

Deduct all amounts paid by
employee excluding portion
relating to finance charges and
fuel

Question 12

Situation 3
Employee pays consideration for
right of use AND Employer’s input
tax was denied

What is deductions allowed against MONTHLY consideration?

Answer 12

Deduct all amounts paid by
employee excluding portion
relating to finance charges, fuel
and portion that relates to fixed
cost.

Question 13

Spices-R-Us is a registered VAT vendor. The CEO
of Spices-R-Us, Mr. Pepper felt that he deserved to
drive a luxury vehicle after his recent promotion as
CEO. Therefore, Spices-R-Us decided to buy a
BMW 325 for Mr. Pepper. Spices-R-Us bought the
BMW from Alberante BMW (a registered VAT
Vendor) on 1 March 2015 and paid R285 000 for the
vehicle. Mr Pepper got immediate use of the motor
vehicle. The company’s VAT period is from 1 March
2015 to 30 April 2015.
Spices-R-Us makes 100% taxable supplies.

Answer 13

 Determined value = R285 000 x 100/114
= R250 000
 “Motor vehicle” as defined
– Therefore, input tax deduction was denied
• Therefore, 0,3%
 Reduction rules - not applicable (no info given)
 x number of months – 2 months
 x 14/114
x % taxable supplies – 100%
Answer = R250 000X0.3%X 2months X14/114
=R184

Question 14

Spices-R-Us is a registered VAT vendor.
Management decided to replace the delivery
vehicle (not a motor vehicle as defined) of the
driver handling the delivery of spices to
wholesale customers. Spices-R-Us paid
R456 000 for the new truck on 1 March 2015.
The driver gets use of the delivery vehicle for
private use on 1 March 2015. VAT period
1 March 2015 – 30 April 2015.
Spices-R-Us makes 100% taxable supplies.

Answer 14

 Determined value = R456 000 x 100/114
= R400 000
 Not a “Motor vehicle” as defined
– Therefore, input tax deduction was claimed
• Therefore, 0,6%
 Special rules – not applicable
 x number of months – 2 months
 x 14/114
x % taxable supplies – 100%
Answer = R400 000 X 0.6% X 2 months X 14/114
=R589

Question 15

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us, Mr. Pepper felt that he
deserved to drive a luxury vehicle after his
recent promotion as CEO. Therefore, Spices-RUs
decided to buy a BMW 325 for Mr Pepper.
Spices-R-Us bought the BMW from Alberante
BMW (a registered VAT vendor) on 1 March
2015 and paid R285 000 for the vehicle. Mr
Pepper got immediate use of the motor vehicle.
Mr. Pepper will be responsible for all costs
relating to the maintenance and repair of the
vehicle.
VAT period 1 March 2015 - 30 April 2015. Spices-
R-Us makes 100% taxable supplies.

Answer 15

Determined value = R285 000 x 100/114
= R250 000
 “Motor vehicle” as defined
– Therefore, input tax deduction was denied
• Therefore, 0,3%
• R250 000 x 0,3% = R750
 Deduction of R85 p.m. ( Important – Mr Pepper bears all the
maintenance costs THEREFORE LIMIT DEDUCTION TO R85
and he does not pay a consideration to the employer for use of
the motor vehicle – NOTE THE DISTINCTION)
 = R750 – R85
= R665
x 2 months = R1 330
 x 14/114 = R163,33 output VAT
 x % taxable supplies – 100%

Question 16

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us, Mr. Pepper felt that he
deserved to drive a luxury vehicle after his
recent promotion as CEO. Therefore, Spices-RUs
decided to buy a BMW 325 for Mr Pepper.
Spices-R-Us bought the BMW from Alberante
BMW (a registered VAT vendor) on 1 March
2015 and paid R285 000 for the vehicle. Mr
Pepper got immediate use of the motor vehicle.
Mr Pepper does not bear the full costs of maintenance and repair instead he pays his employer R400
for the use of the motor vehicle.
• The R400 is paid by Mr Pepper for the
maintenance costs of the motor vehicle.
VAT period 1 March 2015 - 30 April 2015. Spices-
R-Us makes 100% taxable supplies.

Answer 16

Determined value = R285 000 x 100/114
= R250 000
 “Motor vehicle” as defined
– Therefore, input tax deduction was denied
• Therefore, 0,3%
• R250 000 x 0,3% = R750
 Deduction of R400. ( Important – If the input on the motor car was
denied, all amounts paid by the employee to the employer,
excluding finance charges, fuel, and that portion relating to fixed
costs of the motor car. As the amount of R400 – 0 (finance charges
and fuel costs and fixed costs)- all relates to maintenance –
therefore entire R400 allowed as a deduction.
 = R750 – R400
= R350
x 2 months = R700
 x 14/114 = R85,96 output VAT
 x % taxable supplies – 100%

Question 17

Output VAT ON THE CONSIDERATION PAID BY THE
EMPLOYEE TO THE EMPLOYER has to be also
accounted for.

Answer 17

The Output VAT is accounted for on If the input on the
motor car was denied, all amounts paid by the
employee to the employer, excluding finance
charges, fuel , and that portion relating to fixed costs
of the motor car.
If the input on the car was not denied, Output would be
calculated on all amounts paid excluding finance
charges and fuel.

Question 18

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us, Mr. Pepper felt that he
deserved to drive a luxury vehicle after his
recent promotion as CEO. Therefore, Spices-RUs
decided to buy a BMW 325 for Mr Pepper.
Spices-R-Us bought the BMW from Alberante
BMW (a registered VAT vendor) on 1 March
2015 and paid R285 000 for the vehicle. Mr
Pepper got immediate use of the motor vehicle.
Mr pepper pays hisemployer R400 for the use of the motor vehicle.
• The R400 by Mr Pepper is made up of
- Fuel R50
- Maintenance R100
- Finance Charges R 180
- Fixed Costs of the car R70.
VAT period 1 March 2015 - 30 April 2015. Spices-
R-Us makes 100% taxable supplies.

Answer 18

Solution
 Determined value = R285 000 x 100/114
= R250 000
 “Motor vehicle” as defined
– Therefore, input tax deduction was denied
• Therefore, 0,3%
• R250 000 x 0,3% = R750
 Deduction of R400-(R50+R180+R70)= R100. ( Important – If the input on the motor
car was denied, all amounts paid by the employee to the employer, excluding
finance charges, fuel , and that portion relating to fixed costs of the motor car.
As the amount of R400 – R300 (finance charges and fuel costs and fixed costs)-
ONLY R100 is allowed as a deduction – the amount that relates to maintenance.
 = R750 – R100
= R650
x 2 months = R1300
 x 14/114 = R159,65 output VAT
 x % taxable supplies – 100%
Important – Output VAT ON THE CONSIDERATION PAID BY THE EMPLOYEE TO THE
EMPLOYER has to be also accounted for. The Output VAT is accounted for on If the
input on the motor car was denied, all amounts paid by the employee to the
employer, excluding finance charges, fuel , and that portion relating to fixed
costs of the motor car. . As the amount of R400 – R300 (finance charges and
fuel costs and fixed costs)- R100(portion that relates to maintenance)is used
for the Output VAT
Answer = R100 X 2MONTHSX 14/114 = R24,56
Total output VAT =R159,65 + R24,56 =R184 ,21

Question 19

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us, Mr. Pepper gets the use of
a delivery vehicle (not a motor car as defined).
Spices-R-Us bought the delivery vehicle on
1 March 2015 and paid R342 000 for the
delivery vehicle and Mr Pepper got immediate
use of the delivery vehicle. VAT period from 1
March 2015 to 30 April 2015. Mr Pepper bears
the full costs of maintenance and repairs.
Spices-R-Us makes 100% Taxable supplies

Answer 19

 Determined value = R342 000 x 100/114
= R300 000
 “not a Motor vehicle” as defined
– Therefore, input tax deduction was not denied
• Therefore, 0,6%
• R300 000 x 0,6% = R1800
 Deduction of R85 p.m. (Important – Mr Pepper bears all the
maintenance costs and he does not pay a consideration to the
employer for use of the motor vehicle)
 = R1800 – R85
= R1715
x 2 months = R3 430
 x 14/114 = R421,23 output VAT
 x % taxable supplies – 100%

Question 20

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us,Mr. Pepper gets the use of
a delivery vehicle (not a motor car as defined).
Spices-R-Us bought the delivery vehicle on
1 March 2015 and paid R342 000 for the
delivery vehicle and Mr Pepper got immediate
use of the delivery vehicle. VAT period from 1
March 2015 to 30 April 2015.
Mr Pepper does not bear
the full costs of maintenance and repair instead he
pays his employer R400 for the use of the motor
vehicle.
• The R400 is paid by Mr Pepper for the maintenance
costs of the motor vehicle.

Answer 20

 Determined value = R342 000 x 100/114
= R300 000
 “Not a Motor vehicle” as defined
– Therefore, input tax deduction was not denied
• Therefore, 0,6%
• R300 000 x 0,6% = R1 800
 Deduction of R400. ( Important – If the input on the motor car was not denied, all
amounts paid by the employee to the employer, excluding finance charges, and
fuel . As the amount of R400 – 0 (finance charges and fuel costs - all relates to
maintenance – the entire R400 allowed as a deduction.
 = R1 800 – R400
= R1 400
x 2 months = R2 800
 x 14/114 = R343,86 output VAT
 x % taxable supplies – 100%
Important – Output VAT ON THE CONSIDERATION PAID BY THE EMPLOYEE TO THE
EMPLOYER has to be also accounted for. The Output VAT is accounted for on If the
input on the motor car was not denied, all amounts paid by the employee to
the employer, excluding finance charges and fuel. As the amount of R400 – 0
(finance charges and fuel costs)- all relates to maintenance – therefore entire
R400 is used for the Output VAT
Answer = R400 X 2 MONTHS X 14/114 = R98,25
Total output VAT = R343,86 + R98,25 =R442 ,11

Question 21

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us,Mr. Pepper gets the use of
a delivery vehicle (not a motor car as defined).
Spices-R-Us bought the delivery vehicle on
1 March 2015 and paid R342 000 for the
delivery vehicle and Mr Pepper got immediate
use of the delivery vehicle. VAT period from 1
March 2015 to 30 April 2015
Same as example 5 instead he pays his
employer R600 for the use of the motor
vehicle.
• The R600 by Mr Pepper is made up of
- Fuel R50
- Maintenance R200
- Finance Charges R 180
- Fixed Costs of the car R170.

Answer 21

Determined value = R342 000 x 100/114
= R300 000
 “Not a Motor vehicle” as defined
– Therefore, input tax deduction was not denied
• Therefore, 0,6%
• R300 000 x 0,6% = R1 800
 Deduction of R600-(R180 + R50)= R370. ( Important – If the input on the motor car
was not denied, all amounts paid by the employee to the employer, excluding
finance charges, and fuel . As the amount of R600 – R180+R50 (finance
charges and fuel costs)- only R370 is allowed as a deduction.
 = R1 800 – R370
= R1 430
x 2 months = R2 860
 x 14/114 = R351,23 output VAT
 x % taxable supplies – 100%
Important – Output VAT ON THE CONSIDERATION PAID BY THE EMPLOYEE TO THE
EMPLOYER has to be also accounted for. The Output VAT is accounted for on If the
input on the motor car was not denied, all amounts paid by the employee to
the employer, excluding finance charges and fuel. As the amount of R600 –
(R180+R50= R230 (finance charges and fuel costs))= R370
Answer – R370 X 2MONTHSX 14/114 = R90,88
Total output VAT – R351,23 + R90,88 =R442 ,11

Question 22

Spices-R-Us is a registered VAT vendor. The
CEO of Spices-R-Us,Mr. Pepper gets the use of
a delivery vehicle (not a motor car as defined).
Spices-R-Us bought the delivery vehicle on
1 March 2015 and paid R342 000 for the
delivery vehicle and Mr Pepper got immediate
use of the delivery vehicle. VAT period from 1
March 2015 to 30 April 2015
he pays his
employer R600 for the use of the motor vehicle.
• The R600 by Mr Pepper is made up of
- Fuel R50
- Maintenance R200
- Finance Charges R 180
- Fixed Costs of the car R170.
• The delivery vehicle is used 60% for taxable
supplies and 40% for non – taxable supplies

Answer 22

 Determined value = R342 000 x 100/114
= R300 000
 “Not a Motor vehicle” as defined
– Therefore, input tax deduction was not denied
• Therefore, 0,6%
• R300 000 x 0,6% = R1 800
 Deduction of R600-(R180 + R50)= R370. ( Important – If the input on the motor car
was not denied, all amounts paid by the employee to the employer, excluding
finance charges, and fuel . As the amount of R600 – R180+R50 (finance
charges and fuel costs)- only R370 is allowed as a deduction.
 = R1 800 – R370
= R1 430
x 2 months = R2 860
 x 14/114 = R351,23 output VAT
 x % taxable supplies – 60%
R351.23 X60% = R210,74
Important – Output VAT ON THE CONSIDERATION PAID BY THE EMPLOYEE TO THE
EMPLOYER has to be also accounted for. The Output VAT is accounted for on If the
input on the motor car was not denied, all amounts paid by the employee to
the employer, excluding finance charges and fuel. As the amount of R600 –
(R180+R50= R230 (finance charges and fuel costs))= R370
Answer = R370 X 2MONTHSX 14/114 X 60%= R54,52
Total output VAT =R210,74 + R54,52 =R265,26

Question 23

Cessation of a business s 8(2) :Timing

Answer 23

On the day a person ceases to be a vendor –
immediately before cessation- they need to pay output
tax on:
• All goods (excluding goods on which input tax was denied) and rights owned by the person on the date of cessation. (To the extent that output tax had not yet been levied at that time.)
• Outstanding balances owing to suppliers not older than
12 months. (To the extent that output tax had not been levied i.t.o. s22(3))

Question 24

Cessation of a business s 8(2) excludes

Answer 24

• Cessation due to death

- Cessation due to sequestration

Question 25

Cessation of a business s 8(2)

Value (s10(5))

Answer 25

Consideration is the lesser of:
– Cost to the vendor plus any further costs; or
– Open market value
x 14 / 114

Question 26

Cessation of a business means

Answer 26

when a business stops activities

Question 27

Indemnity Payments s8(8)

3 requirements

Answer 27

1. In terms of a short-term insurance contract
2. receives indemnity payment (claim) or payment made to third party
3. to the extent that it relates to a loss incurred in the course of carrying on an enterprise

Question 28

what is indemnity payments. don’t need to know off by heart, just for interest

Answer 28

(1) The losses paid or expected to be paid directly to an insured by an insurer for first-party (e.g., property) coverages or on behalf of an insured for third-party (e.g., liability) coverages. (2) Payments made by the indemnitor under a hold harmless clause on behalf of the indemnitee.

Question 29

Indemnity Payments s8(8) not applicable when relates to

Answer 29

– Supply of services contemplated by the insurance contract are not taxable supplies (e.g. Financial Services); OR
– Total reinstatement of stolen goods or goods damaged beyond economic repair and an input tax deduction was denied

Question 30

Indemnity Payments s8(8) timing

Answer 30

When the payment is received by the insured or the 3rd party suffering a loss.
* NB! Not when the loss occurred.

Question 31

Indemnity Payments s8(8) Value

Answer 31

Consideration received x tax fraction x portion for which loss was incurred in course of enterprise.

Question 32

A motor vehicle as defined of a VAT vendor was
involved in an accident during November 2015
and the motor vehicle was written off. The
insurer paid the following in cash on
20 December 2015:
– Motor vehicle -R50 000
– Damaged stock that was in the vehicle R5 000
– Loss of a 3rd party R25 000
TOTAL R80 000
What are the VAT consequences?

Answer 32

• Amount paid i.r.o. motor vehicle
– Input was denied at acquisition AND damaged beyond economic
repair
– Therefore, no output tax
• Amount paid i.r.o. stock
– Loss in the normal course of enterprise
– Paid in terms of an insurance contract
– Exception does not apply
– Therefore, output VAT payable
• R5 000 x 14 / 114
• = R614
• Amount paid to 3rd party
– Deemed to be directly to the vendor – So therefore received by
vendor including VAT.
– Output VAT payable
• R25 000 x 14/114
• = R3 070

Question 33

A motor vehicle as defined of a VAT vendor was
involved in an accident during November 2015
and the motor vehicle was written off. The
insurer paid the following in cash on
20 December 2015:
– Motor vehicle -R50 000
– Damaged stock that was in the vehicle R5 000
– Loss of a 3rd party R25 000
TOTAL R80 000
The vendor decides to pay an additional
amount of R15 000 to the 3rd party, since
the loss that the 3rd party suffered, was
more than the amount paid by the insurer.
Vat consequences of additional 3rd party payments?

Answer 33

• NO VAT consequences
• Merely the transfer of money
– Specifically excluded from “goods”
– not supply as defined
– not in terms of an insurance contract
• Journal:
– Dr Loss in accident R15 000
– Cr Bank R15 000

Question 34

A motor vehicle as defined of a VAT vendor was involved in an accident during November 2015. The motor vehicle is not written off but
slightly damaged and the insurance
company pays R6,000 to the VAT vendor
for the repairs of the motor vehicle.
What are the VAT consequences?

Answer 34

• Amount paid i.r.o. motor vehicle
– Input was denied at acquisition BUT NOT damaged
beyond economic repair or due to theft.
– Therefore, output VAT calculated
• R6 000 x 14 / 114
• = R737

Question 35

Stock was damaged.
The insurance company does not pay the
VAT vendor R5 000 for the damaged stock
but replaces the stock to the value of
R5 000.
What are the VAT consequences?

Answer 35

There are no VAT consequences for the vendor, as there was no indemnity payment.

Question 36

XYZ CC makes 60% taxable supplies and
40% exempt supplies. A computer which
was used for the general business of the
entity was stolen. XYZ CC received an
indemnity payment of R13 680.
Calculate XYZ CC’s output tax liability, if
any.

Answer 36

• R13 680 x 14/114 x 60% = R1 008 output
VAT payable to SARS.
• XYZ CC’s output tax liability is apportioned
to 60% taxable supplies made.
• With the initial purchase of the computer
as well as the monthly insurance
premiums paid XYZ CC was only entitled
to 60% of the input VAT.

Question 37

Excess payment s8(27) requirements

Answer 37

• Vendor receives excessive payment,
• For taxable supply of goods or services,
• And doesn’t refund within 4 months

Question 38

Excess payment s8(27) how is this treated

Answer 38

Then, vendor will be deemed to have rendered services for such excessive amount and output tax will have to be levied.

Question 39

Excess payment s8(27), If it is subsequently refunded

Answer 39

the vendor can claim additional input tax credit in terms of s16(3)(m).

Question 40

Excess payment s8(27) timing

Answer 40

On the last day of the tax period in which the four month period ends.

Question 41

Excess payment s8(27) Value (s10(26))

Answer 41

Consideration equals excess portion received.

Question 42

ABC CC issues a tax invoice to XYZ (Pty)
Ltd for R228 on 1 March 2015. The
amount was paid on 10 April 2015 by the
accountant of XYZ (Pty) Ltd and was also
paid by the creditor’s clerk of XYZ (Pty)
Ltd on 12 April 2015. ABC CC has a twomonthly
VAT period ending on the last day
of January, March, May, etc.
What are the VAT consequences?

Answer 42

1)Assuming ABC CC retains the overpayment and does not refund the overpayment.:
The excess payment of R228 received by ABC CC will be
treated as a deemed supply and output tax will be payable.
ABC CC will be liable to account for output tax amounting
to R28 (R228 × 14/114).
The time of supply is 30 September 2015, which is the last
day of the VAT period ending 4 months after the excess
amount was received.
2) Assuming ABC CC refunds the overpayment
received, on 20 October 2015.
Upon refunding the amount of R228 to XYZ (Pty) Ltd, ABC
CC will become entitled to claim input tax amounting to
R28 (R228 × 14/114). As the CC failed to refund the
amount within 4 months of receipt, they previously needed
to account for output tax on the deemed supply.
In terms of s16(3)(m) they are now entitled to claim an
additional amount of input tax in the VAT period ending on
30 November 2015.

Question 43

Denied Input Tax

examples

Answer 43

• Acquisition of a motor car
• Club subscriptions
• Entertainment

Question 44

What does Denied Input Tax mean

Answer 44

not a supply as defined

Question 45

Denied Input Tax consequences

Answer 45

-no input vat

no output vat

Question 46

“entertainment” means

Answer 46

the provision of
any food, beverages, accommodation,
entertainment, amusement, recreation or
hospitality of any kind by a vendor whether
directly or indirectly to anyone in connection
with an enterprise carried on by him;

Question 47

Entertainment s17(2)(a)
Exceptions:

Answer 47

Exceptions:
• Vendors in the entertainment industry
• Vendor supplies entertainment to employee/ office holder / connected person and charge covers all direct and indirect costs of such entertainment
• Meals, refreshments or accommodation to
vendor, employee or any self-employed natural person or office holders who had to spend at least one night away from their usual place of residence
• Vendors who organise seminars
• Meals and refreshments in a medical care
facility to employees, as long as they are
incidental to the admission into the
medical care facility
• Acquired by welfare organisation for
furtherance of their aims
• Acquired by municipality for providing
sporting or recreational facilities or public
amenities to the public
• Entertainment acquired for the purposes of
awarding that entertainment as a prize for
bets
• Vendors operating taxable transport
services who supply entertainment to
passengers and crew as part of those
services.

Question 48

Entertainment s17(2)(a)
Exceptions:
• Vendors in the entertainment industry

Answer 48

– All direct and indirect costs covered OR
– Charge = open market value
– Entertainment to clients for bona fide promotion
purposes and in all respects similar to
entertainment that’s supplied regularly by the
vendor
– Goods/services acquired for purposes of making
taxable supplies for provision of any food to
clients which were not consumed by the clients
and are then subsequently supplied to any
employee or welfare organization

Question 49

Club subscriptions s17(2)(b)

Answer 49

Sport, social and recreational clubs

Question 50

Professional bodies

Answer 50

can claim input tax

Question 51

Motor Car s17(2)(c) includes

Answer 51

 Motor Car
 Station wagon
 Minibus
 Double cab
Any other vehicle that:
•Can be used on public roads
• Has at least three wheels or
more
• Is constructed wholly or mainly
for carriage of passengers

Question 52

Motor Car s17(2)(c) excludes

Answer 52

Accommodating only 1 person
Accommodation more than 16 people
Unladen mass of > 3 500kg
Caravans
Ambulances
Game viewing vehicles
Hearses

Question 53

Motor Car s17(2)(c)

Exceptions:

Answer 53

• Motor car dealer
• Specifically for demonstration purposes
• Motor cars given as prizes for bets
• Continuously or regularly supplies motor
cars as prizes to clients

Question 54

denied supply -Motor Car s17(2)(c) costs related to vehicle

Answer 54

• Only denied in terms of ACQUISITION
• Does not apply to costs relating to the
motor car, i.e. :
– Short term insurance
– Repairs

Question 55

SARS Interpretation Note VAT404

Answer 55

acquisition would include getting the use
of a vehicle, therefore, input VAT on rental
of a car would also be denied

Question 56

Mr Ntuli buys a ‘fleet’ of 5 new “Tuk-Tuk’s” for his new sole trade whereby passengers are cheaply transported all over JHB.
A Tuk-Tuk is a small three wheel vehicle that is roadworthy and can transport two passengers excluding the driver.
The Tuk-Tuk’s were bought for R456 000 (incl. VAT). He also took out maintenance plans on all Tuk-Tuk’s which relates to R57 000 (incl. VAT) of the R456 000.
How much input VAT can Mr Ntuli claim?

Answer 56

Mr Ntuli would not be able to claim an input
tax deduction on the cost of the fleet as it is
denied in terms of s17(2)(a).
A Tuk-Tuk meets the definition of a motorcar
as defined (roadworthy, more than three
wheels, transports more than 1 passenger)
The maintenance plan is however not
denied and thus input tax of R7,000 can be
claimed for the amount relating to the
maintenance of the vehicles.