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If you offer a transport service, you can't claim input tax on it. Here's why...

by , 03 November 2014
If your office is on four wheels or you simply employ other people to do the driving, you have to pay a lot of Vat on supplies such as petrol and vehicle repairs.

Sadly though, you can't claim any of it Vat back as input tax.

This means your company needs to account for this extra cost.

Read on to find out why you can't claim this input tax back...

 

Here's why you can't claim input tax as a transport service provider

 
According to the Practical Vat Loose Leaf Service transport services are a Vat exempt supply. This means you can't charge fare-paying passengers on public road and railway transport Vat on their travel costs. 
 
This applies where you supply the public transport between two places in the RSA in the course of a transport business.
 
This exemption excludes game viewing drives and transportation of passengers by air and sea, which is standard-rated. 
 
Here's why you can't claim input tax as an exempt service provider.
 
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Here's why SARS won't let you claim input tax if you're a transport service provider

 
Because your service is Vat exempt, you don't collect any Vat and therefore don't hand any over to SARS.
 
Because of this, SARS wants the Vat you paid on your supplies.
 
That's why you can't claim input tax if you offer a transportation service.
 
So don't try claim input tax if you're in the transport industry. If you do, SARS will punish you for this mistake and make you pay an additional penalty.
 
For more on Vat exempt supplies, check out the Practical Vat Loose Leaf Service. It contains everything you need to know about the different Vat exempt supplies.
 
If you have any questions about exempt supplies, just ask out experts on the Accounting and Tax club
 


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