Even if you reach R1 million in turnover in any twelve month period, your supplies won't be seen to meet the Vat registration
threshold if it's because:
1. You're ceasing to operate
Let's say you're a non -Vat
vendor and decide to shut down your business.
In closing down, you sell off stock on hand at half price, pushing your turnover above the R1 million threshold. But, as you're ceasing to operate, you don't have to register for Vat
2. You're substantially reducing the scale of your enterprise
The markets change all the time and where there's no demand, you won't need to make any supplies in that area. So let's say you no longer supply a certain mechanical part as the industry has moved onto a new technology. You sell off the parts because you no longer need them.
Although the selling price pushes the value of your supplies to over the R1 million threshold, you don't have to register for Vat
because you're downscaling your operations.
3. You're replacing plant or other capital assets in the enterprise
This is when you decide to sell your old assets so you can replace them. Don't count whatever you earn on the sale of your old assets towards your taxable supplies, because you intend to replace your assets.
Vat registration has never been this easy!
Do you know:
When you're eligible to apply for Vat
How to correctly fill in your VAT101 form;
What supporting documents you need to apply; and
responsibilities while waiting for your Vat
We'll give you answers to all this and more. Click here…
4. There are abnormal circumstances of a temporary nature
Don't take into account activities you carry on as a hobby.
For example, a great friend of mine makes the most exquisite goodies for old Kawasaki's. As he does this as a hobby - a temporary circumstance, the Vat
Act doesn't see this as the carrying on of an enterprise.
Be careful. This instance applies only if the SARS Commissioner is satisfied with your explanation of the circumstance!
5. You're making exempt supplies
If you're making supplies like providing education or public transport, these aren't regarded as taxable supplies. So don't take this into account when calculating your Vat
But, there are three important rules to remember about exempt supplies. And there are different processes to follow to levy Vat
correctly. Simply consult your Practical Vat
Loose Leaf now for everything you need to know to deal with your Vat
There you have it. Now you know if the Vat
law expects you to register for Vat
But I must warn you, if you charge Vat
when you shouldn't, you could be prosecuted as a criminal! So make sure you know the A – Z of Vat
Registrations, so you're never on the wrong side of the law.