How does input tax work with 'subscriptions'?
Input tax can become very tricky, especially when it comes to knowing exactly which areas you CAN and what you CAN'T claim input tax on.
And if you get any of these areas wrong, you could face BIG problems with SARS.
One of those areas is subscriptions...
In other words, how does input tax work with subscriptions?
Let's look into it in more detail...
You can't claim input tax on several club subscriptions:
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.
Don't try to claim input tax on club subscriptions which SARS doesn't allow. These are:
Country club memberships;
Subscriptions to a rugby, soccer, cricket or any other sports supporters' club;
Amateur sporting associations like boxing governing bodies or gymnastics associations;
Tea clubs; and
Stokvel savings clubs etc.
Here's an example to help explain this…
Tracey's Tortillas is a restaurant franchise.
She often entertains her suppliers and certain business associates at the Golf Club.
She can't claim the input tax she spends on joining the club, or entertaining her suppliers and business associates.
But there's good news! Certain subscriptions get the thumbs-up from SARS, and you can claim back your input tax on them. Take a look…
What about professional subscriptions?
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SARS will allow you to claim the input tax you pay as a subscription to your professional trade governing body.
This is as long as it relates to your business along with its taxable supplies.
As Tracey is a restaurant franchise, she has to subscribe to her franchise industry magazine.
It publishes trade events, advertise suppliers and provides tips and management strategies for RUNNING her business.
And so she can claim input tax on what she spends subscribing to the magazine.
SARS allows professionals to subscribe to governing bodies in areas like financial services, accounting, auditing, insurance etc.
*So there was some useful information on input tax and subscriptions.
Be sure to use it to your advantage so as to prevent any unnecessary run-ins with SARS.
To learn of many more areas where you CAN and CAN'T claim input tax, page over to chapter I 03: Input tax
in your Practical VAT Loose
handbook, or click here
ti order yours today.
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