Notes of a Third year student studying Bachelors of Accounting at the University of the Free State. With this notes that i have compiled, i was able to proudly say that i received a distinction in Taxation by using this notes. If you are struggling with TAX use this notes, and you could also get yo...
• Value Added Tax Act 89 of 1991 Input VAT (refundable from SARS)
• 15% from 1 April 2018
• Indirect tax tax borne by the vendor himself in
The tax is not assessed directly by respect of goods or services supplied to him (on expenses)
SARS but indirectly though the
Output VAT (Payable to SARS)
taxation of transactions
Tax charged by vendor on supply
of goods and services (on income)
Only a registered VAT vendor is allowed to (and should) add
VAT (output) to the selling price
Output VAT xxx Levied on ALL taxable
supplies
Input VAT (xxx)
Adjustments xxx/ (xxx) Can only claim to the
extent of making taxable
VAT payable / (Refundable) xxx/ (xxx)
supply
Value (100) Consideration (115)
VAT (15)
Excluding VAT Including VAT
Calculate VALUE Calculate VAT Calculate CONSIDERATION
amount: amount: amount:
100 Value x 15% 115
Consideration x Value x
115 100
15
Consideration x 115 Value x 115%
𝑊ℎ𝑎𝑡 𝑦𝑜𝑢 𝑾𝑨𝑵𝑻
𝑊ℎ𝑎𝑡 𝑦𝑜𝑢 𝑯𝑨𝑽𝑬
, Determine before calculating VAT
payable/ refundable
Why?
Determines the time of supplies for VAT purposes.
When a vendor must account for VAT.
❖ Default basis Must apply to Commissioner
Invoice basis
❖ VAT accounted for on the earlier of: Any vendor that is voluntarily registered for
→ Invoice is issued VAT with the value of taxable income not
→ Any payment is received/ made exceeding R50 000, must register on the
payment basis until his taxable supplies
❖ Exception applies to a taxable supply exceed R50 000. S15(2B)
of fixed property
→ Account for VAT when payment VAT is accounted for when:
made/ received ~ Payments are made (purchases)
(except with transaction between ~ Payments are received (sales)
connected persons)
EXCEPTION:
❖ SA Company, CC, Trust is obligated Taxable supply (excluding fixed property) >
to register on Invoice Basis R100 000,
taxpayer must account for VAT on the invoice
basis for that particular transaction
,Disregard the following when determining whether a vendor’s taxable supplies exceeds R2,5
million:
Cessation of or a substantial and permanent reduction in the size or scale of an enterprise
carried on by the vendor
The replacement of a plant or other capital asset used in an enterprise carried on by the
vendor
Abnormal circumstances of a temporary nature
NEW
• Prepare list of enterprise's debtor's
• Prepare list of enterprise's crediors
If a vandor changes from the payment
• Showing amounts owing at end of tax period
basis to the invoice basis he should:
immediately preceding the change over period
S15(9)
• Difference between output tax on debtors and input
tax on creditors, amount due to SARS
Tax periods ~ S27
A* Two month tax period
* Odd- numbered months
B
*
* Two month tax period
* Even- numbered months
C * One month tax period
* Taxable supplies > R30 million
* Taxable supplies <R30 million in * Taxable supplies <R30 million in month period/
D E
12 month period/ in 12 month period/ vendors that applied in
Farmers > R1.5 million Farmers > R1.5 million writing/ default vendors
* 12 month tax period
* Six monthly tax period
* Specific companies and
* Farmers < R1.5 million
trusts
, The commissioner may permit a vendor’s tax period to end either 10 days before or after the last
day of the month during which the period was originally supposed to end.
The future tax period as approved by the Commissioner must be used be the vendor for a
minimum of 12 months commencing from the tax period S27(6)(ii)
Interpretation Note No 52 stipulates that a vendor could use the 10‐day rule if the cut‐off date is:
a fixed day of the week
a fixed date in a calendar month
a fixed day in accordance with ‘commercial accounting periods’ applied by the vendor.
Exclude the following when determining the value of taxable supplies for a 12‐month period
➢ Any cessation of or any substantial and permanent reduction in size or scale of the
enterprise
➢ Replacement of any plant or other capital asset used in the enterprise
➢ Any abnormal circumstances of a temporary nature
NEW
VAT return submit & Fail to pay within
Electronic submission
payment before or subscribed time =
& payment - by the
on the 25th following penalties (10% of tax)
last business day of
the end of the tax and interest at the
the month
period prescribed rate.
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