At a Christmas party, the boss, Jessy, wishes to recognise one of her employees' long service.
She awards him with a 30-year service award with a watch valued at R4800.
It's not a fringe benefit for income tax
purposes. So Jessy can claim the VAT of R589 (4800 x 14/114) as input tax
. No output tax
is payable on the award.
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
· Your books and records comply with the requirements of Section 55 of the VAT Act;
· You didn't claim on exempt supplies;
· Any of your claims were for non-taxable supplies;
· You apportioned inputs correctly and at the right tax
rate (Sections 16, 17 and 20
of the VAT Act);
· And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.
Alan owns a company which utilises several company trucks that carry very flammable substances.
By an unfortunate set of events, one of the trucks catches alight and the driver is trapped inside.
One of your workers, in his bravery, gets the trapped driver out of the burning wreckage, after which you then decide to give him a computer valued at R5000.
In this circumstance, the company can claim input tax
on the computer. This is because SARS doesn't recognise gifts or goods for bravery as fringe benefits.
Those were 2 classic examples of when you can claim input tax
on gifts and awards, and still be in compliance with the Tax Act, VAT Act and Tax Administration Act.
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