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How to account for Vat correctly if you take company stock for personal use

by , 16 April 2014
Let's say you own a supermarket that's registered for Vat. And you decide to take a set of crayons to use for your daughter's school project. While this may seem harmless, you need to account for Vat correctly. How? Follow these three steps so you don't invite penalties and interest for failing to declare and pay output tax.

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Think Vat doesn't apply to your payroll?

You're wrong!

Avoid this common error and keep SARS away from your door at audit time

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You must make an output tax calculation and pay Vat when you've taken business stock for your own personal use

The Practical Vat Loose Leaf Service outlines the three steps you must take to account for Vat when you've used goods from your Vat-registered business for your own use, or 'self supply':

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

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 you taking this stock out of your business for your personal use.

Step #3: Pay SARS the amount of output tax you've identified. You must record this amount in blocks 10 and 11 of your Vat return.

If this sounds confusing, this practical example will make things clearer.

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Here's a practical example of how to account for Vat when you've taken stock from your Vat-registered business for your own use

A sole trader works from home. He buys a new computer and allows his children to use the old computer to play games on.

The vendor must now determine the market value of this old computer and apply the 14/114 tax fraction to it, and then show the calculation and the resulting output tax amount in blocks 10 and 11 of his Vat return.

The bottom line: There are Vat consequences to using your business assets for private purposes. To keep your slate clean with SARS, make an output tax calculation and pay Vat when you've taken business stock for your own personal use.

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