Have you used your business assets for private use? Follow these three steps to get the Vat treatment of your private use right
Did you know there are Vat consequences to using your business assets for private purposes? That's right. If you've used 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. Here are three steps you must follow to ensure you get this right...
One easy way to invite SARS penalties and interest is failing to declare and pay output tax when you've used goods from your Vat-registered business.
The good thing is that you can avoid falling into this trap if you've used your business assets for private purposes. You just need to know how…
Follow these three steps to keep your slate clean with 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, says the Practical Vat Handbook.
Step #2: Apply the tax fraction (14/114) to this market value. This'll give you the amount of output tax you owe SARS for taking this stock out of your business for your personal use.
Step #3: Enter the specifics of the calculation you've made and the amount of output tax you have to pay SARS, in blocks 10 and 11 of your Vat return.
Be sure to keep your working papers to prove to SARS that you've declared output tax on private use.
Use these steps to ensure you get the treatment of Vat right when using your business assets for private purposes.