VAT

ACTIVITY 1 – VAT CALCULATIONS

Complete the missing figures

Cost price Mark - up Selling price VAT Marked price

(excl VAT) 15% (Incl VAT
R % R R R
1 120 50%
2 40% 402.50

ACTIVITY 2 – VAT CONTROL ACCOUNT

The aim of this activity is to summarize.
Hint: - To buy goods, goods are coming INTO the business = Input VAT
To sell goods, goods are going OUT = OUTPUT VAT

The following information was taken from the records of Nokaneng Suppliers which
is registered as a Category B vendor. Nokaneng Suppliers uses the invoice basis for
recording VAT at 15%

Record the following INFORMATION on the VAT CONTROL LEDGER ACCOUNT

1. Balance receivable from SARS R 1 500

2.

Transactions – March 2024 Subsidiary Amount VAT

book (Incl VAT) 15 %
Trading inventory bought for cash CPJ 9 200 1 200
Credit purchases of trading inventory CJ 42 933.33 5 600
Credit Purchases of Zero Rated expenses CJ 6 800 ?
Cash / Credit purchases of operating expenses or CPJ / CJ 870
assets
Total credit sales according to invoices DJ 191 667 25 000
Total cash sales according to cash register CRJ 6 400
Cash sale or Disposal of old computer CRJ 920
Insurance claim paid out after theft of trading CRJ 9 200 1 200
inventory
Donations of Trading inventory @ Cost Price GJ 780
Drawings by owner GJ 1 150 150
Credit notes issued to customers/debtors DAJ 615
Credit notes received from suppliers/creditors CAJ 230
Bad debts written off GJ 1 220
Bad debts recovered GJ 210

3. Errors or omissions.
3.1 VAT on Discount Allowed R 190
3.2 VAT on Zero Rated goods that were sold was incorrectly captured
R260.
ACTIVITY 3

The information relates to Nomhle Traders. The business is registered for VAT. The standard
VAT rate is 15%. Nomhle also sells zero-rated goods.

REQUIRED:
Calculate the VAT amount that must be paid to SARS for the VAT period ended 31 May 2022.

INFORMATION:

A. Harry, the clerk, calculated the VAT amount due to SARS as R55 785.

However, he did not take the following into account:

(i) VAT on goods returned to suppliers R5 070

(ii) VAT on expenses paid R6 240
(iii) VAT on goods taken by Nomhle for personal use R5 400

B. VAT on discount allowed must also be taken into account. The total discount allowed
amounted to R18 860.

C. VAT on sales was incorrectly recorded. Certain goods with a selling price of R31 200
(excluding VAT) should have been recorded as
zero-rated items.

Calculate the VAT amount that must be paid to SARS for the VAT period
ended 31 May 2022.
WORKINGS ANSWER

9
ACTIVITY 4 - VALUE ADDED TAX (19 Marks)

Indicate whether the following statements are TRUE or FALSE. Write only
“true” or “false” next to the question number (5.1.1-5.1.5) in the ANSWER
BOOK.

4.1.1 VAT returns to SARS must be submitted every two months. (1)
4.1.2 Petrol is an example of a zero-rated VAT item. (1)
5.1 4.1.3 The VAT collected by a business from sales, is called output VAT.
.4
(1)
4.1.4 The illegal non-payment or deliberate underpayment of tax, is
called tax avoidance. (1)
4.1.5 VAT may not be claimed on refreshments for office use. (1)

4.2 HP STORES

You are provided with information relating to HP Stores for the VAT
period ended 28 February 2018. The standard VAT rate of 15% is
applicable.

REQUIRED:

4.2.1 After taking into account the errors and omissions, calculate the
VAT amount that is either payable to or receivable from SARS.
Indicate whether this amount is receivable or payable. (12)

4.2.2 The internal auditor discovered that the owner used the VAT
collected from customers to pay expenses of the business.
Therefore, he was unable to pay the VAT owed to SARS on the
due date.

State ONE point of concern that you would offer the owner
concerning this practice. (2)

INFORMATION:

A. Amount due to SARS on 1 February 2018, R2 850.

B. Amount from the journals on 28 February 2018:

Including VAT Excluding

VAT Amount VAT
Sales R27 830 ?

Credit purchases of ? 12 000

stock
Stock returned by R308
debtors
 Bad debts written off R4 554 ? R3 960

C. The following errors and omissions were noted:

 VAT on discounts granted to debtors were not recorded. The

VAT on discount allowed amounted to R74.

 Stock taken by the owner at cost value, R3 200 (excluding

VAT), was not yet recorded in the books.

 VAT on sales was recorded incorrectly. Certain goods with a

selling price of R5 000 (excluding VAT) should have been
recorded as zero-rated items.

4.1 VALUE ADDED TAX

4.1.1
4.1.2
4.1.3
4.1.4
4.1.5
5

4.2.1 After taking into account the errors and omissions, calculate the VAT
amount that is either payable to or receivable from SARS. Indicate
whether this amount is receivable or payable.

12
4.2.2 The internal auditor discovered that the owner used the VAT collected
from customers to pay expenses of the business. Therefore, he was unable
to pay the VAT owed to SARS on the due date.

State ONE point of concern that you would offer the owner concerning this
practice.