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Did you know: These three insurance items are subject to the 14% Vat rate?

by , 15 September 2014
If you run a business, it's safe to assume you have insurance.

This simple act of safeguarding your assets comes with Vat consequences though. It's important that you know what these are so you can deal with Vat correctly and avoid SARS penalties and interest.

To escape penalties, keep reading to discover three insurance items that are subject to the 14% Vat rate.


Here are the three insurance items that are subject to the 14% Vat rate
 

Item #1: Short-term insurance.

You pay Vat on your short-term insurance and can claim back the input tax, like any other normal standard-rated supply.

Item #2: Your premiums for business indemnification.

You can make an input tax deduction of your paid premiums if they relate to your taxable business expenses.

When you claim from your insurance company for any loss in your business, work out the Vat on the payment you receive and pay it over to SARS as output tax. Include this payment on the Vat return that covers the period when you receive the payment.

That's not all.
 

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I'd like to tell you how I saved R75 327 in Vat this year. No tricks. No evasion. Just two little things I didn't know I could claim.

By reading this letter, it will tell you how to avoid costly Vat mistakes, save you money, time and be your CEOs favourite person when you save the company R1000s of Rands in Vat refunds this year.

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Here's one more insurance item that's subject to the 14% Vat rate


Item #3: If you're the insurer, commission or fees you receive from placing either short- or long-term insurance is subject to Vat at 14%.

Remember, if you must pay excess, say to a panel beater, then that excess will include Vat and he must give you a tax invoice for that payment and you can claim the input tax. Excess payments are Vat-inclusive. Each insurance policy is different so read yours to see what it says about excess payments.

Now that you know these three insurance items are subject to the 14% Vat rate, deal with Vat correctly so you avoid SARS penalties and interest.

PS: You'll find more information on insurance and the Vat implications on the Practical Vat Loose Leaf Service.



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