If you're a Vat vendor, you basically act as an agent to collect Vat on behalf of SARS! And the system relies on you as the vendor to pay the correct amount. But SARS checks every step. And it will audit you if it thinks you've handled output tax incorrectly.
But before you can report your output tax in your Vat return so you don't attract SARS' attention, you first need to know how to calculate it correctly. So first let's see how to calculate output tax correctly. Let's take a look...
How to calculate your output tax correctly
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Output tax is the Vat you charge your clients for goods you sell, services you supply, or both.
But how do you apply the tax fraction (x14/114)?
When you apply the tax fraction, multiply the amount of your total sales, inclusive of the Vat you charged, by 14, and then divide it by 114. This gives you the amount of Vat payable to SARS (your output tax).
That's great – but how do you show SARS this calculation? You do this in your Vat return. Let's have a look at how to do this…
Are there any inaccuracies in your tax invoices? You could be liable for penalties, interest and even prosecution!
How to report your output tax to SARS
Are you sure that the tax invoices you receive are issued properly? Are all the SARS requirements on the tax invoice? Have you ever thought about it?
What if something is omitted from a tax invoice on which you've already claimed input tax?
Anyone who has ever experienced a SARS Vat audit will tell you the first thing the auditors check are your tax invoices!
Errors in Vat invoices could cost you a fortune or even result in your company going bankrupt. It's too late to have doubts when the SARS auditors visit your office.
What errors must not be made?
If you are not sure, check here
Enter the total sales amount you charged Vat on into your Vat return in Block 1 in your VAT201 return. You'll include the Vat you charged when you enter this amount.
You then insert your output tax amount for the period of the return. You enter this figure into Block 4.
But filling in your Vat return isn't just about output tax. You also have to worry about input tax, exempt supplies, zero-rated supplies and much more.
To find out how deal with all your Vat calculations correctly, turn to Chapter C01: Calculating your Vat in your Practical Vat Loose Leaf
Don't have one? Click here
Until next time,
Managing Editor, Practical Vat Loose Leaf Service
Getting your Vat refund from SARS just got harder… Put a simple zero in the wrong place on the new Vat return and you can forget about getting even a cent of your money back. Make sure this never happens to you by filling in the new Vat return 100% correctly every, single time. I'll show you how here