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Warning: You're NOT allowed to claim input tax on these club subscriptions

by , 19 December 2013
One of the most common mistakes many vendors make when calculating their input tax claim is to include amounts that aren't allowed. Luckily you can avoid making the same mistake. DON'T claim input tax on these club subscriptions.

SARS scrutinises input tax claims. In fact, one simple mistake could see you facing harsh penalties.

Since that's a risk you can't afford to take, don't try to claim the input tax on club subscriptions that are not allowed by SARS.

You CAN'T claim the input tax on these club subscriptions

Here's checklist of subscriptions that SARS will refuse:

  • Country club memberships
  • Subscriptions to a soccer, rugby, cricket or other sports supporters' club
  • Amateur sporting associations like boxing governing bodies or gymnastics associations
  • Holiday clubs
  • Tea clubs
  • Stokvel savings clubs.

If for instance, your business is part of a fast food franchise, you aren't allowed to claim the input tax you spent on joining the local country club where you play golf, and entertain suppliers and business associates.

But it's not all doom and gloom.

Certain subscriptions get the thumbs-up from SARS, and you can claim back your input tax on them.

SARS will allow you to claim the input tax you paid as a subscription to your professional organisation or trade governing body, as long as it actually relates to your business and its taxable supplies, says Philip Rosenberg Managing Editor of VAT201 E-report: The comprehensive guide to completing your Vat return correctly.

For example, if you're a fast food franchisee, you are allowed to claim the input tax you spent subscribing to your franchise industry magazine that publicises trade events, advertises suppliers and provides tips and management strategies for running your business.

SARS allows professionals to subscribe to governing bodies in areas like financial services, accounting, and auditing and insurance.
Warning: You can only claim the Vat on your employees' professional subscriptions IF staff contracts of employment show clearly that the company will pay for the subscription. If there's no contractual obligation, SARS will reject the input tax claims.

Knowing when to claim input tax on club subscriptions and when you're not allowed will help ensure you treat input tax claims correctly.

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