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Summary Taxation third year
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This download consists of all the topics that will be discussed in third year. The summaries are made according to the university of pretoria's standards.
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VAT 15%Tax (inclusive) on the consumption of goods or services in SA (15%)
1. The Basics
1.1 Introduction:
Each time consumer purchases goods or services (G or S) from vendor in SA, pays price that
includes VAT.
Indirect tax (consumer pays, entity collects + gives to SARS) & direct cost to final consumer
(can’t claim back from SARS)
Charged on usage
Registered vendors may claim VAT as Input Tax in certain circumstances
Based on subtractive or credit input method :. OUTPUT (tax collected) less INPUT (tax incurred)
1.2 VAT Calculation:
Step 1: Calculate OUTPUT TAX
Step 2: Calculate INPUT TAX
Step 3: Determine VAT ADJUSTMENTS (if any) & take into account
Step 4: Input > Output = Refund Output > Input = Payable
OUTPUT TAX less INPUT TAX add/less ADJUSTMENTS
= VAT PAYABLE / REFUNDABLE
Step 5: Complete VAT 201 form
, Invoice Basis
1.3 Accounting Basis
Payments Basis
INVOICE BASIS VAT accounted for on earlier of
invoice issued or
any payment received
o Can create cash flow problems
o Once operating under invoice basis, remain on this basis
o If vendor changes from invoice to payments basis, must calculate amount payable or
refundable
PAYMENTS BASIS: VAT accounted for when
payment made (purchases) and payment received (sales)
o Helps with cash flow
o Can use Payments Basis if applied to Commissioner in writing and vendor is:
Public authority / municipality / municipal
entity that supplies electricity, gas, water etc. Natural person
Association not for gain (welfare) AND
Water board Total value of taxable supplies
Electricity distributor <= R2.5 million (excl.
Foreign Electronic Service Provider VAT) in 12 month
Person voluntarily registered & value of period
taxable supplies < R50 000 (until reach R50k
then INVOICE)
Any supply of R100 000 (incl VAT) or more (excluding fixed property) accounted for on
Invoice Basis!
1.4 Tax Periods
Every vendor registered for a specific tax
period Majority fall into category A & B (every
2 months)
Focus on Category A, B & C
,Category Tax Period Requirements Additional Info
Taxable Supplies Vendors
2 months: ends last (T.S) in 12 mth consistently
day
A (ODD) period <= R30m receiving income
of Jan, Mar, May…
Farmers with T.S. > Spreads admin for
R1.5m SARS
2 months: ends last Same as
B (EVEN) day ‘A’ Same as ‘A’
of Feb, Apr, Jun…
T.S in 12 mth period
> R30m (or likely to For BIG vendors, or
1 month: last day of be) If SARS flags you
C
each month Applied in writing (because you don’t
Due to default ito pay etc.)
VAT act
Only farming
activities & T.S in 12
Seasonal business
6 months: end on last mth period < R1.5m :.
D
day of Feb & Aug Registered micro longer periods
business (apply in
writing)
Co.s / trust who only Connected persons
business = letting of must all be
fixed prop/movable
12 months: end on last registered
goods to OR
E day of their yr of 1 only holds the PPE
admin/management
assessment (YOA) & rents it to the
of co.s that are
connected person
connected persons
with
vendor e.g. sister company
, 1.5 Tax returns & payments
VAT 201 form + PMT to SARS on/before the following day:
Submitted within 25 days/last business day after end of tax period
Payment Method Returns (day of mth) Payment (day of mth)
SARS drop box (not >R100
000) 25th no later than 15:00 25th no later than 15:00
Cheque (not >R100 000 – even
if 25th 25th
multiple cheques used)
Pmt at any of 4 major banks 25th 25th
Debit order (return submitted 25th 25th
via e-filing)
E-filing of return & pmt via Last business day Last business day
SARS’s e-filing system
EFT & return submitted via e- 25th 25th
filing
1.6 Penalties & Interest
Person liable for pmt of VAT fails to make pmt within
prescribed period: o Penalty of 10% of tax due
o Interest at prescribed rate (calculated from 1st day of mth following mth in
which pmt due) o
Commissioner can prescribe time that pmt must be made – if late, deemed
to be made on
next business day
1.7 Refunds
INPUT > OUTPUT or amount erroneously paid = vendor entitled to refund
Must be claimed within 5 yrs
If amount < R100 – NOT REFUNDABLE
SARS must refund within 21 business days (interest free) after receipt of
vendor’s return Interest (at lower rate) paid by SARS if refund is later than
21 days (this = Gross Income)
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