Before we get to the requirements, let's take a brief look at what notional input tax is
Generally, the rules are, you can't claim Vat back if you buy goods from a non-Vat vendor or the supply isn't taxable. And if you're a Vat vendor, you must charge Vat when you sell the goods in carrying on your enterprise.
This means you lose out if you buy second-hand goods, right?
Vat law creates some fairness.
It allows you to claim notional input tax
when you buy second-hand goods, even though you don't have a tax invoice to back up this specific input tax deduction.
Vat law allows for this to make sure the second-hand goods market isn't at a disadvantage. And this ensures there isn't a distortion in market prices.
Now let's get those requirements I was talking about…
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Are you sure you've claimed input tax on these five office expenses?
Plants for the office;
Flowers sent to sick staff;
Promotional gifts; and
Stationary orders for the office?
There are 29 other input tax claims you can use to your advantage too...
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Five requirements to claim the input tax on second-hand goods
The goods must be second-hand.
You must first determine if the goods fall within the definition of secondhand goods. In terms of Vat law, this means the goods must be previously owned and used.
Please note that mining rights, plants, animals and gold coins don't fit the definition of second-hand goods. You can't claim input tax on them.
The supply mustn't be taxable. This means, you can only claim notional input tax when you buy second-hand goods from someone who isn't a Vat vendor.
To claim, the person you buy from must be a South African resident and the goods must be in South Africa.
You can only claim after you make payment for the goods.
You must have valid documents to claim input tax on second-hand goods.
In this article
, we explain that, to make your claim legally, you must keep a record of the details of the person you got the goods from and have a description of the goods and the amount. You must use the Vat 264 declaration form instead of a tax invoice.
There you have it: Meet these five requirements and SARS will never deny what you're due when you claim on second-hand goods.
PS: There's still so much more you need to know about claiming input tax on second-hand goods. That's why we recommend you check out the Input Tax 101 e-Report.
It will guide you so you never make mistakes when it comes to your input tax claims.