Summary
Summary VAT Notes
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These notes provide a comprehensive detail of the VAT Act dealt with in 3rd year.
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LML4804 PORTFOLIO MEMO - MAY/JUNE 2023 - SEMESTER 1 - UNISA - (DETAILED ANSWERS - DISTINCTION GUARANTEED!)
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General: VAT is taxed on consumption
Indirect tax meaning that it is not assessed directly by SARS unlike income
tax
1 April 2018 – 15%
Claim input Tax and you levy output tax
Terminology:
VAT Vendor: registered for VAT and levies VAT on selling price on goods
Enterprise: business activities carried on by VAT vendor
Supplier: VAT vendor sells goods to another person
Output tax: VAT that supplier levies on selling price
Recipient: VAT vendor buys goods from another person and can claim
input tax
Input tax: any VAT paid that recipient may claim back
Accounting Basis:
Invoice basis: on the earlier of issue of invoice and when payment is
received.
Payment basis: accounted for when payments are made or received. Must
apply with commissioner to use this basis.
Tax periods:
Category 2 months Jan, March, Vendors with taxable sup <= R30mil in
A May .. 12 months
Category 2 months Feb, April … Farmers with taxable sup > R1.5mil in
B 12 months
Category 1 month Jan, Feb, April Vendors with taxable sup >R30mil in 12
C … months
Category 6 months Feb & August Farmers with taxable sup <R1.5mil in
D 12 months
Category 12 months Feb Entities that solely receive rental and
E management fees from connected
persons
Calculation:
output VAT – input VAT
Output Tax:
2 types of supplies:
1. Taxable supplies which consist of Output Tax is only
a. Standard rate (15%) apportioned on % taxable
b. Zero rated (0%) supplies if:
2. Exempt supplies (no VAT applicable)
- Fringe benefits
Levied in 3 situations: - Indemnity payments
- Supply of Goods or services
, - Importation of goods into South Africa
- Supply of imported services
Standard Rated supplies
1. Supply of Goods or Services: s7(1)(a)
Must be able to meet the definitions:
Definition ‘Goods’:
Movable goods, fixed property, any real right, electricity, Krugerrands
(since they are made from gold and not money but are zero rated)
Excluded:
o Money
o certain rights (mortgage bond)
o stamp or card which has monetary value
Definition ‘Services’:
Anything done/ to be done
Excluded:
o goods
o money
o stamp or card which has monetary value
Definition ‘Enterprise’:
Any enterprise or activity carried on continuously OR regularly in SA OR
partly in SA and goods& services are supplied for a consideration whether
profit or not.
Excluded:
o Salary or any remuneration received from employer
o Hobby of Natural Person
o Exempt supply
o Supply of commercial accommodation < R120 000 taxable supp
o Supplies are made in branches/ businesses outside RSA
Branch/ main business can be separately identified
Independent accounting system is maintained
Consideration (or open MV if not $ but rather in the form of G&S) = value
+ VAT
2.Importation of Goods into RSA: s7(1)(b) &s13
Not Output Tax, but importer still has to pay for VAT even if they are not a
vendor. This is to make it fair to local suppliers that do supply the goods, but
citizens choose to import them rather.
Custom union member countries:
Namibia, Botswana, Lesotho, Swaziland
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