Summary
Summary Value added tax (VAT)
- Course
- Tax 399
- Institution
- Stellenbosch University (SUN)
this document is a summary of examples - i will continually update the document with more information
[Show more]
Content preview
VAT- When starting a question always state:
o “All section references are to the Vat Act”
,OUTPUT TAX
Commercial rental income Amount x 15/115
Residential income Par12(c) = exempt supply -
If we supply accommodation to employees this is residential and
thus exempt
Transportation by mini buss S12(g) transportation of fair paying passengers by road or railway is -
an exempt supply
Interest income Financial service = exempt -
Insurance settlement Amount x 15/115 x TS%
Insurance “motor car” If input tax was previously denied then there is NO output tax -
Insurance “replacement” Replacement of items is NOT a payment received in money -
Thus NO output tax
Insurance “ paying for 3rd party” There is a payment of money
Output tax= amount x 15/115 x TS%
IMPORTED goods (par13) BLNS country
(amount +import duties) x 15%
Normal country
(amount x 110%)+ import duties) x15%
(remember imported goods also has a input tax consequence)
IMPORTING service Amount x NON-TS % x 15%
“consultation fee”
Fringe benefit This is a transport by road= exempt and there is NO output -
“ bus tickets for staff”
Fringe benefit There is output tax on:
➔ Assets given to employees
➔ Right of use of asset
➔ Services made available by employer -> changes to
employee uses for private use
(amount – input tax) x 15/115 x TS%
COSATU subsidies A subsidy given to employees is a supply of MONEY and not a -
supply of goods/services , thus this is NOT a fringe benefit which
attracts VAT and thus NOT a deemed supply on which output tax
must be levied
(this is NOT an exempt supply)
Training of staff Training given to staff on how to operate a machine
➔ Not educational training = exempt
If you remunerate staff for time whilst on training
➔ No output tax can be levied
Proceeds from sale of computer Amount x 100%
Trademark (supplied) Incorpeal = goods BUT this is however excluded from the definition
of goods
So it is thus a supply of a service
Supply of service x 15/115 x 100%
Trading stock SOLD to wife The supply is deemed to take place at the OMV (market value)
(connected )
Bad debts recovered Amount x 15/115
Early settlement allowance We purchased trading stock on credit for R43 000 BUT paid R40 000
as early settlement
= variable allowance
Therefore the R3000 x 15/115
Laptop was taken into personal use For example
, (change in use) 70% TS -> 0%TS
Then there is a deemed supply of goods
OMV x 15/115
Suspensive sale Output tax = cash value x 15/115
Cash value:
Monthly installments x months
+ deposit
-finance charge
= cash value
Finance lease There is output tax on the date of delivery
Cash = cost + vat
Progressive supplies (s9(3)(b) The person who supplies charges output tax in respect of each
payment received
Earlier of:
➔ Payment is received/due
➔ Invoice is issued
Rental agreement (s9(3)(a) Even though there is 1 supply, output tax is accounted for on each
monthly amount
Earlier of :
➔ Receipt
➔ Payment is due
Creditor sells assets of debtors Requirements = s8(1)
towards satisfaction of debt The goods sold are deemed to be taxable supplies in the hands of
the creditor
(the creditors doesn’t have to be a vendor BUT the debtor does)
Selling price x 15/115
Irrecoverable debts recovered s22(2)` We have to levy output tax
Input claimed x (recovered/ written off)
BUT if the vendor is on the payment basis then there is NO
adjustment for irrecoverable amount s22(1) proviso (ii)
We are the creditor ( and we don’t S22(3) there will be output tax levied
settle) (irrecoverable debts) 15/115 x amounts outstanding older than 12 months
DEEMED DISPOSAL
“ceasing to be a vendor”
- Delivery vehicle LESSOR of :
➔ CP
➔ OMV
Less any amounts outstanding less than 12 months x 15/115
- Furniture If it was solely used for business:
Lessor of :
➔ CP
➔ OMV
X 15/115
- Debtors Time of supply : earlier of : -
➔ Invoice
➔ Payment
However there is no output tax because it is already accounted for
when the invoice is issued
- Trading stock Lessor of :
➔ CP
➔ OMV
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Talizamazoue. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53022 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now