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11 Vat exempt supplies you need to know about

by , 13 August 2014
Quick question: Do you know what exempt supplies are? If not, you're not alone.

Not many vendors know what exempt supplies are. In fact, they often confuse them with zero-rated supplies.

The good news is from now onwards, you'll no longer be in the dark about exempt supplies.

Today, we reveal what exempt supplies are and, most importantly, we reveal the 11 exempt supplies you need to know about so you can comply with Vat law.

What are exempt supplies?

In this article, experts behind the Practical Vat Loose Leaf Service explain that exempt supplies are supplies that are exempt of tax. There's no output tax, no input tax and no tax invoices. Tax doesn't apply at all in this case.

Now that you know what exempt supplies are, let's take a look at the 11 Vat exempt supplies.


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Here are the 11 Vat exempt supplies you need to know about

Exempt supplies are the following:

#1: Supplying financial services (such as loans, life insurance, levying of interest);

#2: An association not for gain which supplies goods which were donated to it;

#3: Letting of residential accommodation. This includes supplying staff housing;

#4: Activities of political parties and bargaining councils;

#5: Supplying leasehold land for residences;

#6: Supplying land situated outside of South Africa;

#7: Levies paid to a body corporate of a sectional title company, a share block company, home owners association or to a retirement village;

#8:  Road and rail transport to fare paying passengers;

#9: Supplying educational services;

#10: Supplies by a trade union; and

#11:  Services of caring for children in a crèche or an afterschool care centre.

The two important points you need to know about exempt supplies are that:

  1. If your business renders partly taxable and partly exempt supplies, you may register for Vat for the taxable part.
  2. But, if your business only renders the above exempt supplies, you'll never be able to register for Vat even if your turnover is more than R1 million in a 12-month period.

Now that you know what exempt supplies are and know about the 11 Vat exempt supplies, comply with Vat law.


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