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Invoicing for secondhand goods explained

by , 13 January 2014
Don't know how to record secondhand good sales? If so, read on to find out. Below, we tell you everything you need to know about invoicing for secondhand goods.

Regardless of whether it's a new or second-hand item, the Practical Vat Loose Leaf Service says you'll need a tax invoice:

  • If the transaction is for more than R50; and
  • If the transaction is between R50 and R5 000.

That's not all to tax invoices.

  • You must issue a tax invoice to the recipient within 21 days of the sale.
  • You must always issue standard-rated tax invoices (where Vat is charged at14%) in South African currency.
  • You can issue zero rated tax invoices (where Vat is zero rated) in a foreign currency.
  • You must issue a full tax invoice for any zero-rated supply, even if the value of the supply is less than R5 000.
  • If the consideration (i.e. the full sale amount including Vat) charged for the supply exceeds R5 000, you're legally obliged to issue a full and proper tax invoice.

What about secondhand goods? Do you need tax invoices when dealing with them?

Here's what you NEED to know about invoicing for secondhand goods

You'll remember that the general rule that governs input tax claims is that you MUST back up all your claims with a tax invoice.

But, if you're a registered Vat vendor and buy secondhand goods from a private seller who isn't a vendor, you can claim your input tax, (which is then called 'notional input tax') even though your seller wasn't able to supply you with a tax invoice.

While a formal invoice doesn't have to be issued, you'll have to record the following details of the transaction:

  • Name, address and ID number of the supplier;
  • Date of purchase;
  • Quantity or volume of goods;
  • A description of the goods;
  • The consideration paid for the supply;
  • A declaration by the supplier that the supply isn't a taxable supply (for purchases more than R1 000);
  • You must verify the person's ID number against their ID book or passport; and
  • If the value of the supply exceeds R1 000, you must make a copy of the person's ID document, or if the supplier is a company, a copy of the official company letterhead, and retain it.

Use the VAT264 form to record secondhand good sales.

The Practical Vat Loose Leaf Service recommends you look on the SARS website for a form called the VAT264.

This form has been specially designed to help you keep all the necessary records for purchases of second-hand goods. In addition to the info above, you must keep a VAT264 on your records.

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