There are new VAT rules that apply that now apply to you when buying fixed property.
Fixed property, as according to Section1 of the Sectional Titles Act and Section 1 of the Property Time-Sharing Control Act, includes:
· Land, including improvements on the land;
· A sectional title unit;
· A share in a share block company;
· A timeshare interest in any timeshare scheme; and
· Any right in such land, unit share or timeshare.
And if you follow these rules correctly, you can put more cash back into your business.
Here are the 5 rules to follow when buying or selling fixed-property:
Your claim MUST relate to a taxable supply.
In other words, you can't just send your fixed-property purchase forms and expect a full VAT refund. Click here
to find out more…
Charge 14% VAT on the sale of property which forms part of your business assets, and where you have used those assets as a taxable supply and you were entitled to an input tax
claim when you bought the property.
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
· Your books and records comply with the requirements of Section 55 of the
· You didn't claim on exempt supplies;
· Any of your claims were for non-taxable supplies;
· You apportioned inputs correctly and at the right tax rate (Sections 16, 17 and 20
of the VAT Act);
· And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.
Claim the input tax on a fixed-property purchase.
If you buy fixed property that you'll use to produce taxable supplies and you pay VAT on it, then you can claim the VAT back as input tax when you pay for the property. But note that this doesn't include payments to a lawyer's trust account and isn't applied against the purchase price.
If the seller is a non-vendor, the purchase is treated as the sale of second-hand goods, and your input tax claim is notional input tax.
If you'll be using the property for both taxable and exempt supplies, then you can't claim all the input tax. But you will be able to apply a special adjustment that is applicable in such instances.
*If you want to lean more details on each of these 5 rules, then subscribe to the Practical VAT Loose Leaf Service
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