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Can you claim input tax on second-hand goods?

by , 26 May 2014
In this tough economy, buying second-hand goods is a good way to bargain hunt.

But, the big question if you're a Vat vendor is: Can you claim input tax on your more affordable second-hand goods?

Read on to find out the answer so you'll know exactly what to do when you buy second-hand goods for your business.

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Not sure if you can claim input tax on second-hand goods? Here's the answer

If you buy second-hand goods for your business from a person who isn't a Vat vendor, you'll be glad to know that you CAN claim input tax on second-hand goods.

This is called notional input tax.

But, claiming input tax on second-hand goods isn't that simple. You must keep the following details if you want your claim to succeed.

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Make sure you keep these details to back up your input tax claim on second-hand goods

As you know, when it comes to input tax claims, you must have proof to back up your claims. The rules are no different when it comes to second-hand goods.

You must use the Vat 264 declaration form to back up your transaction.

The form must show the details of the person who sold the goods to you, a description of the goods and the amount you paid for it.

The Practical Vat Loose Leaf Service gives you a breakdown of what you must record:

  • Name, address and ID number of the supplier;
  • Date of purchase;
  • Quantity or volume of goods;
  • A description of the goods;
  • The consideration paid for the supply;
  • A declaration by the supplier that the supply isn't a taxable supply (for purchases more than R1 000);
  • You must verify the person's ID number against their ID book or passport; and
  • If the value of the supply exceeds R1 000, you must make a copy of the person's ID and keep it. If the supplier is a company, make a copy of the official company letterhead and keep it.

Now that you know you can claim input tax on second-hand goods, make sure you keep the relevant details to back up your claim.

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