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What is VAT?
Indirect tax
30 Sept 1991
Initially established @ 10%
VAT return accounts for all OUTPUT tax (on goods supplied)
Seller (if VAT vendor) has to charge VAT & pay it
over to SARS AND
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The input tax incurred by Vendor (Pty) Ltd when it initially purchased
.............................................................................................................................................
If an amount excludes VAT, simply multiply by 15%
the goods is calculated as follows:
to determine the VAT charged.
.............................................................................................................................................
R600 x 15% = R90 (the cost price inclusive of VAT to Vendor (Pty) Ltd
was therefore R690).
............................................................................................................................................. If an amount already includes VAT, the tax fraction
(i.e. 15/115) is applied to this amount to determine
.............................................................................................................................................
The VAT payable by Vendor (Pty) Ltd to SARS is: the VAT included therein.
Total output tax R150
.............................................................................................................................................
Less: total input tax (R90)
.............................................................................................................................................
(divide by what we’ve got, multiply by what we want)
VAT payable to SARS R60
.............................................................................................................................................
Solution:
The output tax charged: R1 000 x 15/115 = R130,43
…………………………………………………………………………………
Trial Balance - ???
The input tax: R600 x 15/115 = R78,26
…………………………………………………………………………………
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VALUE v CONSIDERATION
Output tax on supplies Input tax on supplies TO
BY vendor vendor
Voluntary registration
• Can voluntarily register if turnover in a 12-month period >R50 000 • Self study…
• Must initially register on payment basis • separate branches or divisions [30.3.3]
• Must switch to invoice basis once R50 000 reached
Going concern
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Example Example
Mr G is a lawyer who carries on business in his own name. He is Whatsfordinner (Pty) Ltd has three branches that only make taxable
registered as a vendor. He buys a commercial building and earns rental supplies. None of the three branches are independent branches.
from letting it to a firm of engineers. In his capacity as a lawyer, he charges
his clients VAT on his legal fees. Branch 1: Turnover of R360 000 for 12 months (excluding VAT)
Branch 2: Turnover of R340 000 for 12 months (excluding VAT)
Must he charge VAT on the business rental? Branch 3: Turnover of R320 000 for 12 months (excluding VAT)
1 020 000
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Types of supplies
Exempt supplies
Types of
ONLY make exempt supplies Residential accommodation supplies
cannot register as vendor
Education services
Exempt
Taxable
supplies
Transport by road or railway supplies
30.7, 30.8
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Tax invoices
The word “TAX INVOICE” Individual serialized number
Supplier: Date invoice issued
- name
Description of goods supplied
- address
- VAT reg number Quantity of goods supplied
Recipient: Either
- name - value of supply PLUS tax
- address
OR
- VAT reg number
- consideration with statement
that VAT included @ x%