Four Vat refund rules to live by
The taxman has already doled out R12.8 billion in tax refunds this tax season to happy taxpayers. But there are easily hundreds of Vat vendors who have lost out on potential Vat refunds, simply because they don't know what they can claim back. And yet other vendors who'll get a tax penalty instead of a refund, because they've tried to make claims they're not allowed to make.
We asked the Vat
experts at the Practical Vat
Loose Leaf for some advice.
Obey these fourVat refund rules
Here are the four ground rules you need to keep in mind to claim back a refund:
1) If your input tax
exceeds your output tax
, you're entitled to a refund.
2) If your output tax
exceeds your input tax
, the difference shows the Vat
liability you'll have to pay over to SARS.
3) You can't off-set a refund for one tax
period against Vat
payable for another tax
period – but SARS can!
4) You must have documentary proof for every item you claim input tax
for. If you can't prove it, or if your records are incomplete or invalid, don't even attempt the claim! SARS conducts periodic audits to verify claims and you'll pay a fixed penalty if you try and evade or postpone paying tax
SARS can hit you with penalties that include a fine or even imprisonment for up to two years if you don't comply or five years for evasion! SARS can also levy interest at the prescribed rate.
You'll end up in a great deal of trouble with SARS if you:
• Claim non-existent amounts of input tax
• Claim input tax
that you can't verify; or
• Make a claim that you don't have complete documentation for.
This is seen as fraud and SARS will penalise you a fixed penalty, interest and an additional non-compliance penalty.