Get input tax right every time with these five useful tips
With all the changes to VAT Act, it's far too easy to make a mistake regarding input tax. And that's something you definitely don't want to do! Because one little error will not only lead to your input tax claim being denied, but also to you being hit hard by severe penalties, fines and interest.
So to help you ensure that you're on the right side of the VAT Act when it comes to input tax, here are five useful tips to follow...
Keep reading to see what they are...
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
· Your books and records comply with the requirements of Section 55 of the VAT Act;
· You didn't claim on exempt supplies;
· Any of your claims were for non-taxable supplies;
· You apportioned inputs correctly and at the right tax rate (Sections 16, 17 and 20
of the VAT Act);
· And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.
Get input tax right every time with these five useful tips…
The formula to follow when you work out your VAT liability or refund is: VAT charged on supplies made (i.e. your output tax) less VAT paid to your suppliers (i.e. your input tax) = the amount of VAT payable/refundable.
If you only make exempt supplies, you can't register as a VAT vendor or claim any input tax on those supplies.
Don't claim input tax on the purchase or rental of motor cars – not even on car hire when you're away on business or entertainment expenses. This is a common mistake that just isn't allowed.
If the input tax exceeds the output tax on your VAT201 return, then SARS owes you a refund. If the output tax exceeds the input tax, then you'll have to pay over the difference to SARS.
Never claim any amount of input tax if you can't prove it with a valid tax invoice, Customs release documents and receipts or VAT264 second-hand declarations.
* To learn much more on input tax, simply page over to Chapter I 03: Input Tax i
n your Practical VAT Loose Leaf Service
Don't already have it? No problem! We've got you covered.
Simply click here
to order your copy of this fantastic VAT resource today.
Note: 5 of 1 vote