Finally - The truth about notional input tax and how it works
If you're a VAT vendor, chances are you know the words 'seconds hands goods' and 'notional input tax' go hand in hand'.
But do you actually know what notional input tax is and how it works?
Read on to find out...
The link between input tax and secondhand goods explained
Did you hear SARS denied De Beers Consolidated Mines R7 million input tax claim?
When De Beers employed local financial service providers to work out a fair price of their shares, they claimed the R7 million input tax.
But SARS denied this. And after 12 years of legal battles, the Supreme Court of Appeal agreed!
Here's how to make sure you know what you can and can't claim input tax on.
There's a great deal of confusion when it comes to second hand goods and notional input tax.
And you can't afford not to have a clear understanding of what it all means.
Because, with SARS, ignorance is no excuse.
Notional input tax is the VAT you can claim on secondhand goods. This is if you're buying the goods for your business from someone who isn't a vendor.
But why do we need notional input tax? Keep reading to find out why...
Why the need for notional input tax?
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Because the seller isn't a vendor, regular VAT can't be charged on those goods. Only registered VAT vendors can charge VAT.
BUT because you ARE a VAT vendor, you have to charge VAT when you sells those goods.
To create some sense of fairness, you're entitled to a 'notional input tax deduction' on the purchase of those goods. Even though you won't have a tax invoice to back up this specific input tax deduction.
But be warned, even though you don't need a tax invoice for a notional input tax deduction, it doesn't mean you escape SARS' scrutiny entirely. The Vat Act lays down a whole list of requirements relating to notional input tax deductions.
Use the checklist in your Practical VAT Handbook for the three requirements your notional input tax must meet to qualify for a deduction. Claim your copy here.
Here's how you can be 100% sure about every input tax claim you submit
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