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If you don't know these eight general input tax rules, it could land you a Vat audit

by , 07 October 2014
Claiming input tax back as a Vat refund is a great way to strengthen your company's cash flow. Unfortunately, it's all too easy to make a mistake when it comes to claiming input tax.

These mistakes can trigger a SAR Vat audit. A process that means weeks of SARS going through your tax history and financial records.

Don't risk it! Follow these eight general input tax rules to avoid mistakes and prevent a Vat audit visit from SARS...

 

Always follow these eight general input tax rules

 
Input tax general rule #1:
You must be in possession of a valid tax invoice!
 
Input tax general rule #2:
You can claim input tax on any item you purchase or any expense you have, as long as you use it in the course of your Vat registered business. 
 
Input tax general rule #3:
You can claim input tax on second-hand goods you buy for your business. This is as notional input tax.
 
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Input tax general rule #4:
There are certain expenses and purchases you may NEVER claim input tax. SARS will deny the input tax on these up front!
 
Input tax general rule #5:
If your business makes mixed supplies – i.e. taxable and exempt supplies - you must check if you need to do an apportionment calculation on your input tax deductions.
 
Input tax general rule #6:
If you claim input tax on a tax invoice and haven't paid your supplier within 12 months of the date of that invoice, you have to 'add back' the input tax!
 
Input tax general rule #7:
If you discover you haven't claimed VAT back on some back invoices, you can do so when you remember, but it must be within five years of the date of that invoice.
 
Input tax general rule #8:
If you only render zero rated supplies, for example, you sell fresh fruit and vegetables, you're still entitled to claim your input tax on your business expenses, such as rent, telephone, electricity, etc.
 
Follow these eight general input tax rules so SARS never has a reason to audit your business. 
 
PS. Are you missing out on these 34 Input tax savings?
 

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