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Have you used your business assets for private purposes? Use these three steps to stay on the right side of SARS

by , 11 June 2013
Did you know there are Vat consequences to using your business assets for private purposes? The truth is, no matter what you do, you will be audited by SARS and auditors will reconcile stock and asset lists against Vat and income tax returns and identify any discrepancies. So don't invite penalties and interest for failing to declare and pay all your output tax. Use these three steps to stay on the right side of SARS.

According to the Practical Vat Loose Leaf Service, many business owners make the mistake of treating their business stock as their own personal disposable property. Don't fall into this trap!

If you've taken goods from your Vat-registered business for your own use, you need to make an output tax calculation and pay the Vat over to SARS. Failure to do this could result in hefty penalties.

So how do you keep your slate clean with SARS?

Use these three steps to stay on the right side of SARS if you've used your business assets for private purposes

Step #1: Determine the market value of the business stock you're appropriating for your own personal use (the usual selling price).

Step #2: Apply the tax fraction (14/114) to this market value. This will give you the amount of output tax that's due to SARS on taking the stock out of your business for your personal use.

Step #3: Enter the specifics of the calculation you've made. The resulting amount of output tax you've identified has to be paid to SARS in blocks 10 and 11 of your Vat return.

Remember to keep your working papers to prove to SARS that you've declared output tax on private use.

There you have it. Use these three steps to declare output tax if you've used your business assets for private purposes and stay on the right side of SARS.
 



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