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4 circumstances in which you can claim an output tax adjustment

by , 23 December 2015
An adjustment is a calculation that leads to an additional amount of output tax that must be paid or input tax that may be claimed.

You would do an adjustment when you change the use of goods. For example:

· Where you originally got goods for your business, but now use them for exempt supplies or another non-business use; or

· Where you got goods for exempt supplies, or another non-business use, and now you want to use them in your business.

When it comes to output tax, there are 4 circumstances in which you may claim an output tax adjustment. They are:

Circumstance#1:

Goods and services were initially acquired for business purposes and input tax is claimed afterwards. These goods are now being used for private purposes or in the making of exempt supplies.
 
Keep reading to see what the other 3 circumstances are…

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Circumstance#2:

Assets that cost more than R40 000, and are used only partially for taxable supplies, have an annual decrease of more than 10% of taxable use. (As of 1st April 2005, this adjustment doesn't apply to public authorities)

Circumstance#3:

A customs-controlled area enterprise got goods and services where VAT is levied at a zero rate. This adjustment only applies to goods or services for which input tax wouldn't have been denied (for example, a motor vehicle), had those goods been provided by a vendor who wasn't in a customs-controlled area. 

Circumstance#4:

A going concern is acquired at a zero rate and is, as a result, applied for purposes other than making taxable supplies.
 
NOTE: You can't do adjustments (for output or input tax) on goods where the input tax was specifically denied (for example, entertainment).
 
*So, there were 4 circumstances in which you may claim an output tax claim.

To learn more useful information on adjustments, subscribe to the Practical VAT Loose Leaf Service today.  


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