HomeHome SearchSearch MenuMenu Our productsOur products

Accepting bets on what William and Kate will name their baby! Here are the Vat implications for betting companies

by , 24 July 2013
British bookmarkers are coining it in the wake of the birth of the royal baby. According to media reports, the gambling frenzy went into overdrive after the royal palace announced that the Duchess of Cambridge had gone into labouron Monday. She's since given birth to a baby boy. Since then, bookmakers have taken in about $1.8 million from people all over the world who are placing bets on the baby's name and his future endeavors. It's so lucrative, some betting agencies have described the royal birth as 'the biggest non-sporting betting event'. And it's certainly cast the spotlight on the Vat consequences of betting here at home. Read on to find out what they are so you can comply.

'The Vat consequences of betting are simple if you know the basic rules' says the Practical Vat Loose Leaf Service.

Businesses that accept bets are treated like any other business. This means if the annual turnover of your betting business exceeds R1 million, you must register as a Vat vendor.

Revealed: Two Vat consequences of betting

Output tax and betting: You see, where a person bets an amount on the outcome of a race or on any other event, for instance the name of the royal baby, the person with whom the bet is placed supplies a service to the person placing the bet. This means your betting business must declare output tax on bets received.

Remember, the Vat Act says that when you supply a service you must levy Vat!

Input tax and betting: The Vat Act clearly states how you must treatinput tax when bets are involved. This means the following deductions may be claimed:

  • An amount equal to the tax fraction of any amount paid as a prize or winnings to the recipients (winner)
  • An amount equal to the tax fraction of any amount of tax on betting levied and paid for the benefit of any Provincial Revenue Fund (Section 16 (3)(e)); and
  • Vat paid on expenses relating to a competition.

Here's an example of how the Vat consequence works

Honest Joe is a bookmaker and receives R3 420 000 inbets during the March 2013 tax period. Joe pays outR2 280 000 in winnings and R684 000 in provincialbetting tax.

What is the output and input tax Honest Joe can claim back?

Output tax

Bets received: R3 420 000 x Vat (14/114) = R420 000

Input tax

Winnings paid out: R2 280 000 x Vat (14/114) = R280 000
Betting tax paid: R684 000 x Vat (14/114) = R84 000

Vat payable to SARS = R56 000

Remember, any amount of bets you place, or the amount of winnings you receive will include a Vat portion.

Knowing the Vat consequences of betting will help ensure your business is compliant.








Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>