Two things you must do to guarantee SARS will accept your input tax claim
Finance Minister, Pravin Gordhan will deliver his 2013 Budget Speech to Parliament on later today. There have been several requests from business for tax reliefs leading up to today and many are hoping this comes through. If they don't, businesses will come under even more pressure to pay taxes. Luckily, you'll still be able to use your input tax credit to reduce your Vat bill, or qualify for a refund! But to do that, you need to make sure your input tax claims fulfil these two criteria
As a Vat vendor, it's your duty to charge output tax and claim input tax as long as you can prove your claims with the required documentation.
But 'all it takes is just one mistake for SARS to deny your input tax claim and slap you with penalties and interest!' warns Dee Bezuidenhout in The Practical Vat Loose Leaf Service
This can add thousands to your company's SARS' bill.
Luckily, by ensuring your input tax claim contains these two things, SARS will have no choice but to accept it.
Here are the two things you must do to guarantee your input tax claim
#1: Keep all your tax invoices. You need a valid tax invoice to prove your input tax claim to SARS. If you don't have the tax invoice or if the invoice isn't valid, you can't claim the credit.
#2: Only claim for items you're allowed to claim on. The second element to your input tax strategy is to know what you can claim for and what you can't.
Here are some examples of business costs you can claim input tax on:
Fixed assets; and
'One of the most common mistakes vendors make when calculating their input tax claim is to include amounts that aren't allowed,' says Bezuidenhout. If you do that, you stand the chance of SARS rejecting your input tax claim right off the bat.
Bottom line: Input tax claims are a great way to cut your SARS bill by a few thousand rand. Make sure you claim correctly to avoid having them rejected and landing on SARS' bad side.
To learn more about input tax and what you can and can't claim, get the Practical Vat Loose Leaf. In the Practical Vat Loose Leaf we've got a dedicated chapter on input tax. In it you'll discover:
When and how to claim your input tax
Two things you must do to guarantee your input tax claim
7 items you can claim input tax on
9 more items you CAN claim input tax on, but didn't know about
5 exceptions to the rule against entertainment expenses
Motor vehicles you can and can't claim input tax on
Get the Practical Vat Loose Leaf here.