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1 Rule to follow to claim notional input tax on second-hand goods

by , 19 March 2013
Notional input tax on second-hand goods always catches Vat payers off-guard.

In a past Vat Matters: Can you claim Vat on second-hand goods from a non-Vat vendor? we discussed that you can claim Vat on second-hand goods.

As you'll remember, this Vat is also known as notional input tax.
Don't know what qualifies as notional input tax? You're not alone! Most Vat payers don't know either. But SARS has very specific rules for claiming notional input tax. If you get this wrong your whole claim isn't valid.  
Let's have a look at what SARS says, so you don't get caught out…

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1 Rule to claim notional input tax

You can only claim notional tax on second hand goods. But you must make sure they meet these three requirements:

According to the Vat Act, SARS says these items are second-hand goods:

  1. Previously owned or used (including fixed property);
  2. In South Africa; and
  3. From a seller who's a South African resident.

Read on to find out what doesn't qualify…

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SARS tells us that these aren't second-hand goods:

  • Animals (livestock);
  • Gold coins; and
  • Prospecting, mining and exploration rights.

For these goods you can't claim notional input tax.

But, if the goods you deal in appear in the first list, you can go ahead and claim notional input tax on them.

Look out for our upcoming Vat bulletin where we'll tell you another two rules to always get your notional input tax claims right. If you have urgent notional input tax questions, visit the Accounting  & Tax Club. You're guaranteed to get an answer there.

Until next time,
Dee Bezuidenhout
Independent Vat expert: Practical Vat Loose Leaf Service

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