Partnerships and paying VAT
Read on for a step-by-step useful synopsis of what you need to do so you don't make any mistakes.
First of all, keep in mind that the Vat
Act treats a partnership as a separate legal person for Vat
purposes. That means your partnership must register for Vat
, but not the individual persons in it.
Thus, since a partnership is a separate legal 'person', it falls into the definition of an 'enterprise'.
Note that an enterprise is any business that:
• Supplies goods and services;
• On a regular or continuous basis;
• Is inside South Africa or partly inside South Africa;
• Receives something in exchange for supplying goods or services (this doesn't just refer to money); and
Makes a profit or not.
If your activities meet these five requirements, for Vat
purposes your business is an enterprise (Section 1 of the Vat
Here are the two instances when you'll be liable to register your partnership for Vat
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You'll need to register your partnership for Vat
1. Your partnership has a turnover of more than R1 million in any previous 12-month period; or
2. Your partnership has an agreement or contract which confirms your partnership will have an income of R1 million or more in the next 12 months.
Bear in mind that you can voluntarily register your partnership for Vat
if your turnover has exceeded R50 000 in the last 12-month period.
In respect to the Vat registration
of partnerships and the VAT128 form, use the VAT101 form to register your partnership for Vat
When doing so, you'll have to fill in the VAT128 form since this form provides all the details for all the partners in your business. It also contains the declarations from all your partners confirming they're partners in your partnership.
Once you've done that, you'll attach the VAT128 form to your VAT101 form.
The final step comes in once SARS approves your application and then allocates your partnership with a Vat
number. This number will only apply to your partnership.
And remember, if some of your partners own or develop their own businesses outside your partnership, these enterprises are separate from your partnership and they'll need their own Vat