There are tons of expenses you have to cover as a racing operator. You have to deal with the jockeys, their horses and then there's the race course itself. And, of course, you can't forget managing all the bets that come in.
All of these expenses add up. But there's one more expense you need to account for, particularly when it comes to handling the bets. If you don't, your 'day at the races' will land you in serious trouble with SARS.
I'm talking about the Vat you must withhold and pay over to SARS on every bet you take.
That's right! Gambling operations, such as horse racing, have very clear Vat implications. Read on to find out how these work so your horse racing doesn't land you with a 200% penalty from SARS...
*********** New release ************
Get your Digital Practical Vat Guide and save time and money by using the many printable documents, forms and declarations.
There are four types of traders horse racing Vat implications apply to
There are four categories of traders operating in the horse racing industry. These are:
1) Racing operators;
2) Race horse owners;
3) Managers and trainers; and
Each of these traders has their own Vat implications to consider. And as a racing operator, you have one of the most complicated. After all, not only must you collect Vat on bets, you must then account for it when you pay out for the winnings.
Here's why you have to account for this Vat.
The Vat Act sees racing operators as enterprises
As a racing operator, you probably manage race courses and training centers in South Africa for the horse racing industry. You also operate gambling outlets for betting on horse racing and other sporting activities. Because of all this, the Vat Act
includes you under the definition of 'enterprise' (Paragraph (a), Section 1 of the Vat Act
According to the Vat Act
, an enterprise is any vendor or entity that provides goods or services to other people on a regular basis. This definition covers any enterprise or activity of a commercial, financial, industrial, mining, farming, fishing or professional concern.
As an enterprise you must register for Vat and then you must:
• Charge Vat at 14% on the supply of goods/services;
• Account for output tax on all bets received; and
• Deduct input tax on winnings and prizes you pay out.
You also need to pay betting taxes to the Provincial Revenue Fund. You can claim the Vat amount on this payment as input tax. You can calculate this at 14/114. But the Provincial Revenue Fund no longer has to give you a tax invoices.
And if you transfer the bet to another bookkeeper because you see it as high risk (this is called placing a 'take back bet'), you can claim input tax on the amount you place with the second bookkeeper. To do that, the second bookkeeper must issue you with a tax invoice.
As you can see, being a race operator isn't an easy task when it comes to Vat. Ensure you account for it when it comes to the bets you take from your clients.