Input tax mistake: Trying to claim input tax without supporting documents.
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
· Your books and records comply with the requirements of Section 55 of the VAT Act;
· You didn't claim on exempt supplies;
· Any of your claims were for non-taxable supplies;
· You apportioned inputs correctly and at the right tax
rate (Sections 16, 17 and 20
of the VAT Act);
· And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.
You'd be surprised at how many people get this wrong.
An example can be found in the case of South Atlantic Jazz Festival (SAJF) vs. SARS
SARS refused to give them any input tax
, on the services they received from their sponsors, because they couldn't produce any tax
invoices for them.
And even though they eventually did claim input tax
, they had to first go through a whole court process, which could have been avoided!
So what's the message here?
It's all very clear. You need to produce valid tax
invoices to SARS when claiming input tax
If you don't have the tax
invoice, or if it's not valid, then you can't claim the credit. And if you do claim input tax
without a valid tax
invoice, then SARS will go ahead charging you understatement penalties of at least 25% of the VAT you claimed on the invalid tax
*So be warned that, without valid tax
invoices, your ignorance will more than likely not suffice when it comes to claiming input tax
: If you want to learn all there is to know about input tax
, simply page over to Chapter I 03
in your Practical Vat Loose Leaf Service
handbook, or click here
to order your copy today.
With it, you'll have access to all VAT issues, and not just input tax
. It's an invaluable VAT resource! So if you don't already have it, click here.