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Taxation > VAT > Flashcards

VAT Flashcards

1
Q

Fringe Benefits

A

Deemed supply - s18(3)
− Fringe benefits to employees by a vendor is deemed supply
− No deemed supply if the supply is
o Exempt,
o Zero-rated
o Supply of entertainment or
o Where the employer would have been denied an input originally - s8(14)

• Time of supply – s9(7)
− Time when the benefit becomes subject to employees tax.

• Value of supply – s10(13)
− Fringe benefit Value x 15/115

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2
Q

Instalment Credit Agreements : ICA

A

• Deemed Supply - s8(11)
− Supply of any goods in terms of any rental agreement
or ICA is deemed to be a supply of goods.
• Time of Supply - s9(3)(c):
− Earlier of delivery of the goods or payment of any
consideration. All VAT claimable or payable at this
point.
• Value of Supply - S10(6):
− Consideration = Cash value of the goods (includes
VAT, excludes finance charges)

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3
Q

Instalment Credit Agreements : Rental

A

• Deemed Supply - s8(11)
− Supply of any goods in terms of any rental
agreement or ICA is deemed to be a supply of
goods.
• Time of Supply - S9(3)(a):
− Earlier of payment or accrual.
− As an when each payment is made or becomes due and
payable.
• Value of supply - Ss 10(2) and 10(3)
− Rand value or open market value

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4
Q

Connected Persons Rule

A

s7(1)(a)
s9(2)(a)

• S10(4) – Value of Supply Rule
− Consideration deemed to be Open Market Value

o Supplier and Recipient are connected person;
o No consideration or consideration less than Open
Market Value; and
o Buyer will not be able to claim the FULL INPUT VAT.

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5
Q

Export Goods

A

s11(1)(a)(i): zero rated, overrides s8(9) if exported

• Deemed Supply - s8(9):
− Vendor delivers or consigns goods to an address outside
of the RSA or provides a service to a branch situated
outside of the RSA.
• Time of Supply - s9(2)(e):
− At the time the goods are consigned or delivered to such branch.

• Value of Supply - s10(5):
− Lower of cost or open market value.

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6
Q

Transfer to Foreign Branches

A

• Deemed Supply - s8(9):
− when a vendor consigns or delivers goods to a branch outside RSA and
− The branch is excluded from the definition of an ‘enterprise’ and
− The vendor is deemed to make a taxable supply
• Time of supply s9(2)(e)
− When the good are delivered or the service is performed.
• Value of Supply s10(5)
− Lower of acquisition cost or open market value
• All supplies to the independent foreign branch of goods or services are:
− Zero-rated – s11(1)(i) and s11(2)(o)
o When supplied to the foreign branch.
o When a supply is made by the foreign branch or the main business the supply is not made in the course of an enterprise and as such the supply will have no VAT consequences.
• All supplies to non independent foreign branch of goods or services
− No VAT when supplied
− Zero-rated – s11(1)(a) and s11(2)(k)
o When supplied to a person in that foreign country.

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7
Q

Export Services:

A

s8(9):
• Export Services: Service Rendered Outside South Africa – s11(2)(k)
− A service is subject to VAT at 0% if it physically rendered
outside South Africa
− Even if the service is rendered to a South African resident.
• Export Services: Services to a non-residents – s11(2)(l)
− Services rendered in South Africa to a non-resident is 0%.
− But the 0% does not apply if the service related to
o Land in the RSA; or
o Connection to movable property situated in the RSA unless that movable property will be exported; or
o The person who is supplied is a non-resident who was in
SA when the services is rendered.
• s9(2)(e)
• s10(5)

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8
Q

Going Concern

A

• Deemed Supply s8(7)
− Deems the disposal of a business, as a going concern, to be a supply of goods.

• Zero-rated - s11(1)(e)
− zero rates the supply of a going concern if requirements are met:
− Both parties are VAT vendors
− Agree in writing that consideration is inclusive of VAT at 0 %; and
− Agree in writing that it will be an income-earning activity on date of transfer; and
− All assets necessary for carrying on such enterprise must be disposed of by supplier to recipient.

  • Interpretation Note 57
  • S9(1)
  • S10(1) and s10(2)
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9
Q

Accomodation (residential)

A

• A dwelling is defined in s1 as:
 any building, premises, structure or other place or part thereof
 that is intended for use predominantly as a place of residence
or abode of any natural person,
 including fixtures and fittings belonging thereto and enjoyed
therewith,
 except where it is used in the supply of commercial
accommodation.
 Excluding hostels or hotels

  • In terms of s12(c) the supply of a dwelling under the agreement for the letting and hiring thereof is exempt from VAT.
  • Or an employer provides lodging and/or boarding to an employee

• Commercial Accommodation is excluded from the definition of a dwelling and therefore not exempt from VAT

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10
Q

Accommodation (commercial)

A

• Commercial accommodation is defined in s1:
 Lodging or board and lodging, together with domestic
goods and services, in any house, flat, apartment, room, hotel
• Regularly or systematically supplied and
• Total annual receipts greater R120 000 but excluding • Letting/hiring of dwelling.

s7(1)(a)
s9(1)
• Value of Supply for Commercial Accommodation - s10(10)
− 28 days or less
o Output tax levied at the full value of the supply
− >28 days (unbroken period)
o Output tax levied at 60% of the inclusive charge

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11
Q

Ceasing to be a vendor

A 
• Deemed supply - s8(2)
−	When a person ceases to be a vendor in terms of
o	Goods on hand OR rights still owned
o	Outstanding balances owing to
o	supplied not older than 12 months
o	Unless input denied or would have
o	been denied.
o	
TOS: s9(5) : VAT period they cease…

• Value of the supply - s10(5)
− At lesser of Cost (incl VAT) or MV on date ceasing to be a vendor.

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12
Q

Non-supplies

A

• Deemed Supply – s8(14)
− If a vendor supplies goods or services in the course or
furtherance of his enterprise, must levy Output Tax on
these supplies
− However, s8(14) provides that if the Input Tax has been denied in terms of the VAT Act:
o Then no Output Tax is levied on the Supply

− Similarly, if goods were acquired by a vendor to wholly make exempt supplies, the subsequent sale will not be subject to VAT – definition of an Enterprise

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13
Q

Output Tax and Apportionment: s7(1) and s8(16)

A

• Deemed Supply – s8(16)
− If a vendor acquires goods partly for making both taxable
and non-taxable supplies and then subsequently sells these
goods.
o Deemed to make a taxable supply and the total consideration is subject to VAT in terms of s8(16)
o s16(3)(h) Input Tax adjustment just prior to supply
• Two exceptions to where apportionment is allowed:
− Fringe Benefits and Insurance or Indemnity Payments.
• Input Adjustment: Where a supply is subsequently made wholly in the course of the enterprise when originally the full input could not be claimed.
− s16(3)(h) provides a corresponding input for the part that was
not used in the enterprise, just prior to the supply
− Compensates for the full VAT being charged on the output

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14
Q

Excessive Consideration

A

• Deemed Supply - 8(27)
− When a vendor receives any payment for a taxable supply of goods or services at the rate of 15%
− That is in excess of the consideration charged
− Output Tax will be payable if the excess is not refunded within 4 months.
• Value of Supply - s10(26):
− Excess portion of the payment received
• Time of Supply – s8(27)
− Last day of the VAT period during which the 4 month period ends

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15
Q

Part Supplies

A

s8(15)
• Supply that consists of both standard rated supplies and
zero-rated supplies

  • Each part is deemed a separate supply under s8(15).
  • Only the standard rated portion is subject to VAT.

• CSARS v British Airways PLC
− VAT is levied on a supply of a service by a vendor, and not merely upon the receipts.

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16
Q

Imported Goods BLNS

A

• VAT payable on all imported goods
− Excluding zero-rated and exempt goods
• Time of Importation in terms s13(1)
− When the goods enter South Africa via a designated commercial port
• Calculation of the VAT on Importation s13(2)(b) BLNS
Customs Duty Value XXX
Import Surcharge XXX
Other Taxes XXX
XXX
15%
VAT XXX

17
Q

Imported Goods non BLNS

A

• VAT payable on all imported goods
− Excluding zero-rated and exempt goods
• Time of Importation in terms s13(1)
− Date on which the goods are released or enter for home consumption.
• Calculation of the VAT on Importation s13(2)(a) non BLNS
Customs Duty Value XXX
10% of the Customs Duty Value XXX
Non-Rebated Customs Duty XXX
Import Surcharge XXX
Other Taxes XXX
XXX
15%
VAT XXX

18
Q

Imported Services

A

• S7(1)(c): provides for the imposition of VAT on the supply of imported services by any person.

• Time of supply s14(2)
−	Earlier of
o	The issue of an invoice
o	Payment
• Value of the supply s14(3)
−	Greater of
o	The value of consideration or
o	The open market value
19
Q

Insurance

A

• Deemed supply - s8(8)
 Where a vendor receives consideration In terms of an insurance contract
 for a loss incurred in the ordinary course of carrying on an enterprise

 Deemed consideration received for services performed

• Not applicable when:
 Supply of services contemplated by the insurance contract are not taxable supplies;
OR
 Total reinstatement of stolen goods or goods damaged beyond economic repair and an input tax deduction was denied.

• Time of supply - s8(8) :
 When the payment is received by the insured / the 3rd party suffering a loss

• Value of supply - s8(8):
 15/115 x Consideration received

20
Q

Irrecoverable Debts

A

In terms of s22(1) when a vendor has accounted for Output Tax in respect of a taxable supply and all or part of the consideration becomes irrecoverable
- The vendor becomes entitled to an Input Tax Deduction
- Input deduction = Tax fraction at time of supply x
irrecoverable debt

  • In terms of s22(2) where any amount is wholly or partly recovered – deemed VAT charged.

In terms of s22(3) when a vendor has accounted for Input Tax and the full consideration is not paid after 12 months (from the end of the tax period in which the input was claimed)

  • The vendor becomes liable for Output Tax
  • Output VAT = tax fraction at time of supply x amount not paid
21
Q

Change of use Adjustments

A

Deemed Supply - s18(1)
• Goods being applied wholly for non-vatable purposes (eg own consumption or given away)

Time of supply – s9(6)
• Time of supply is on the date applied for non-taxable purposes

Value of supply s10(7)
• AxB
• A = Tax Fraction (i.e. 15/115)
• B = Open-Market Value

• Potential for s16(3)(h) input adjustment

Taxation (14 decks)

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