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Have you written off any debts recently? Here's how to claim the Vat

by , 18 April 2014
Picture this...You have a business and one of your clients owes you money. You've done everything to recover the debt; from calling several times to handing him over to a debt collector. You then decide to write off the debt and have abandoned it. You're now stressing about the fact that you're out of pocket. If this sounds familiar, you'll be glad to know the South African Vat system makes provision for these events! Read on to find out how to claim Vat on debts you've written off and improve your company's' cash flow.


Every year, SARS rejects 90% of all Vat Registrations.

Don't become a statistic


Here's how to claim Vat on debts you've written off

There's a silver lining when you've written off a bad debt.

The Practical Vat Loose Leaf Service says a positive aspect is that where a debt is written off as irrecoverable and you have already accounted for the relevant output Vat, you can claim back the output Vat relating to that bad debt which hasn't been recovered.

You'll claim this as input Vat in the Vat period during which the debt was written off. You include this input Vat amount at block 17 on the Vat return.

Here's an example of how you'll claim Vat on debts you've written off

You have an invoice of: R11 400
Your client has only paid: R5 700
You write off the debt: R5 700
Your input tax claim is: R5 700 x 14/114 = R700


If you know the difference between a company car and a travel allowance you can save thousands.

Here's how


Keep these two things in mind when it comes to claiming Vat on debts you've written off

You'll only be allowed to claim an input tax deduction when you've done the following:

  • You've physically written off the debt in your accounting records,
  • Have abandoned the debt or handed it over to a lawyer or debt collector.

That's right! You can't write off a debt you're still chasing or the debtor is still paying off.

There you have it. Knowing how to claim Vat on debts written off will help improve your company's cash flow.

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