How to reduce your VAT with business travel input tax claims
My friend Gordon is one of the directors of an outsourced training company. He's always flying around the country to present training for his company's clients, and often goes on training courses overseas.
He asked me which portion of his travel, subsistence and accommodation costs his company can claim back as input tax, because he doesn't receive a regular subsistence allowance. He simply keeps his invoices and gives them to his company accountant for reimbursement.
Some companies make the mistake of claiming other business expenses. If you claim any one of the below expenses, SARS will deny your input tax claims...
All it takes is just one mistake for SARS to deny your input tax claim and slap you with penalties and interest!
With the Practical VAT Handbook, you'll be 100% sure of every input tax credit you can claim.
It's your complete guide to input tax, with information on:
• Nine items you can claim input tax on
• 10 Items you CAN claim input tax on, but didn't know about
• Five exceptions to the rule against entertainment expenses
• Eight Motor vehicles you can claim input tax on
• And much, much more!
Get your hands on your copy here
Business travel expenses you can't claim input tax back on
1. Foreign air tickets are zero-rated for Vat, so you can't claim any input tax on these tickets.
2. Car rental for a regular motor car, not one of the vehicles listed above.
3. Don't try to claim the input tax on meals and refreshments for clients! This counts as an entertainment expense, and SARS won't let you make the claims.
To make any of the allowable business travel input tax claims, remember your employee has to keep all invoices and receipts as proof.
But there's one condition your employee MUST meet for business travel input tax claims to be valid.
Let's take a look…
What SARS auditors will check when auditing your input tax
With recent history, many Vat vendors have overstated their input tax, both mistakenly and fraudulently.
If you claim input tax, your SARS Vat audit is impending.
And when the SARS auditor comes knocking at your door, his top objective is to check the validity and accuracy of your information and documents.
Here's what he'll check…
The one condition your employee MUST meet for business travel input tax claims to be valid
If you want to claim the input tax on an employee like Gordon's travel expenses, he must spend at least one night away from his regular work place or home.
So, if he flies to a different city for the day and flies back home that night, you can't claim the expenses back from SARS.
For the full list of business travel expenses you can claim input tax back on, claim your risk free copy of the Practical VAT Handbook.
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