Summary
Summary VAT
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A summary of Value Added Tax with at a 2nd year level.
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ValueAdded
Definition
Tax VAT is levied on the value of the supply of goods and
services by a vendor in the furtherance of an enterprise
within the Republic
Output VAT
VAT levied on the sale of goods and services by a vendor
Input VAT
VAT on items purchased for trading which can be refunded to the vendor or set
off against the VAT liability
Elements of the definition
Value:
Consideration paid or received excluding VAT. Deposits are not part of
consideration till they are set off against the price
Supply:
Includes sales, transfers of ownership, donations, performances
Date of supply is earlier of payment or invoice
Goods:
Tangible items such as fixed property and any real right in something
including electricity
Sale of goodwill is a good
Cash, revenue stamps and right in mortgage are not goods
Services
Anything done or to be done including cession or surrender of rights
Making available any facility or advantage
Vendor
Any entity registered for VAT or who should be registered
Enterprise
Activity carried out continuously or regularly in the republic or partially
where goods and services are sold not necessarily for profit
Exclusions:
VAT Exempt supplies are the business
Employer to Employee services
Private Hobbies
Commercial Accommodation with annual taxable supplies below
R120 000
, Public or municipality event
Supplies to foreign branches
Registration
Compulsory if taxable supplies exceed R 1 000 000 for the year
Also, necessary if a contract obliges supply more than R1m
Abnormal expenditure is ignored
May voluntarily register if taxable supplies exceed R50 000 for the year
Category of Vendor
A = VAT periods ending January, March, May, July, September, November
B = VAT periods ending February, April, June, July, August, October, December
C = Supplies exceeding R30m per annum, VAT return monthly
F = VAT return annually (Small Business)
Grounds on which SARS can refuse to register one for VAT
No fixed address of business or residence
No accounting records or appropriate accounting records
No bank account
Previous cancellation of registration due to non-compliance with VAT Act
Cancellation of registration
If a vendor cancels registration SARS must be notified within 21 days
SARS will cancel if supplies fall below R50k per annum
If operations cease all VAT payable becomes automatically due
Types of Supplies
Standard-rated supplies Zero-rated supplies Exempt supplies
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