If you're still struggling to grasp when you can claim input tax, you're not alone.
Many VAT vendors battle.
While knowing you're not alone in your struggle might be comforting, it doesn't mean things have to remain the same.
And this is where we come in.
Today, we reveal six rules you must follow when it comes to claiming input tax so you can boost your company's cash flow legally.
The two biggest mistakes everyone makes with their input tax claims
Most VAT vendors make one of two big mistakes when claiming their input tax.
1.Don't know about certain input tax deductions which SARS allows, and then lose out on important cash flow savings for the business; or
2.Claim when they shouldn't and face SARS penalties and assessments!
But as a savvy business owner, I know you want to claim for all your input tax deductions and get your VAT refunds. Not only does this minimise your VAT bill, but it injects some cash into your business too.
But if you aren't aware of every input tax credit available to you, you'll lose out on shrinking your VAT bill! After all, if you don't claim it, SARS isn't going to tell you to do so…
Well, take the guesswork out of your input tax claims!
I have the one tool you need to be 100% confident you claim every possible input tax credit available to you. And stay away from the claims SARS specifically denies.
You won't go wrong with your input tax claims if you follow these six rules
Input tax rule 1: You must have a valid tax invoice for the transaction or a bill of entry for an import.
With SARS, proof is everything. If you can't back up your claims with the right documents, SARS will deny them.
Input tax rule 2: You can claim input tax on any item or expense you use in the course of your VAT-registered business. This means your supplier must have charged VAT on the transaction.
Input tax rule 3: You can claim input tax on second-hand goods you buy for your business – this is notional input tax.
To ensure SARS approves your claim, keep a record of the details of the person who sold the goods to you, a description of the goods and the amount you paid for them.
Here, you must use the VAT 264 declaration form instead of a tax invoice.
Input tax rule 4: You can't claim input tax on certain expenses and purchases.
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They took Comair for R6.5 million!
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Last two rules you must follow when it comes to claiming input tax so you can boost your company's cash flow legally.
Input tax rule 5: If you only render zero-rated supplies, (for example, you sell fresh fruit and vegetables) you can claim input tax on your business expenses.
Some of the business expenses you can claim on include rent, telephone and electricity.
Input tax rule 6: You can claim input tax on invoices you forgot about.
If, for example, you discover you haven't claimed VAT back on some back invoices, you can make your claim, but it must be within five years of the date of the invoice.
We hope knowing these rules will make it a little easier for you to grasp when you can claim input tax so you can boost your company's cash flow in a legal manner.
You could be missing out on 19 input tax VAT savings...
You're a business finance savvy individual, but are you 100% sure you're claiming all the input tax credits back available to you? The Input Tax 101 eReport reveals 19 input tax claims you can use to your advantage. Get your copy here
Until next time,
Group Publisher: Fleet Street Publications
P.S. Do you want to minimise your VAT bill? The Practical VAT Handbook will allow you to calculate VAT efficiently and take advantage of little known, legal, VAT saving strategies. Get your copy here…