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Do these two things to guarantee your input tax claims

by , 16 May 2014
Attention Vat vendors: It's your duty to charge output tax and claim input tax as long as you can prove your claims to SARS and back them up with all the required documents.

Get this wrong and SARS will deny your input tax claim and slap you with penalties and interest!

Since that's something that happens all too often in business these days, our experts suggest you do these two things to guarantee your input tax claims are a success.

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Errors in Vat invoices could cost you thousands!

Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

Click here to find out how to make sure your Vat invoices are 100% legal.

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Here's how to ensure you get your input tax claims right and avoid SARS penalties

Experts at accounting and tax club.co.za outline two things you must do to guarantee your input tax claims:

#1: Have valid tax invoices

You need a valid tax invoice to prove your input tax claim to SARS. If you don't, or if the invoice isn't valid, you can't claim the credit.

Remember, you tax invoice will only be valid if it has:

  • The words 'Tax Invoice', 'Credit Note' or 'Debit Note', depending on the document required.
  • The name, address and Vat number of the supplier (the Vat number will be a ten digit number, starting with '4').
  • The name, address and Vat number of the purchaser.
  •  A serial number of the invoice.
  • The date the product/service was issued.

If you want to find out the rest of the requirements of a valid tax invoice, click here.

Once you've got your invoice, there's one more thing you need to do to guarantee the success of your input tax claims.

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Think Vat doesn't apply to your payroll?

You're wrong!

Avoid this common error and keep SARS away from your door at audit time

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#2: Know what you can claim

The experts say the second step to your input tax strategy is to know what you can claim.

If you claim what you're not supposed to claim, SARS will punish you.

Let's take a look at some examples of business costs that you can claim input tax on:

  • Trading stock;
  • Raw materials;
  • Manufacturing overheads;
  • Administrative overheads
  • Marketing expenditure;
  • Fixed assets; and
  • Fixed property.

If you want a list of other tax deductible expenses, check out your copy of the Practical Vat Loose Leaf Service.

Now that you know the two things that will guarantee your input tax claims, claim every input tax credit you can and don't make costly mistakes.

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