All it takes is just one little mistake for SARS to say 'No!' to your input tax claim before hitting you very hard with penalties, and, on top of it all, interest!
And with all the new changes to the VAT Act, you simply can't afford to make any!
Having said that, here are 3 things you can do to guarantee your input tax claim:
1.Claim EVERY input tax credit you can
In order to do this, you should know what you can claim.
You'll have these 3 basic supplies in your business:
· Standard-rated supplies (goods you charge or pay VAT on at 14%): You can claim input tax on standard rated supplies;
· Zero-rated supplies (Goods you charge or pay VAT on at 0%): Even though you might charge VAT at the zero rate of something, you can still claim input tax. It's still a taxable supply, except that it's simply taxed at a different rate.
· Exempt supplies (exempt from VAT): These are exempt from VAT altogether, and so you can't claim input tax on them.
2.Get your tax invoices in order
You need a valid tax claim to prove your input tax claim to SARS. If you don't have the tax invoice, or if it's not valid, then you can't claim the credit. If you claim input tax without a valid tax invoice, then SARS will charge you understatement penalties of at least 25% of the VAT you claimed on the invalid tax invoice.
3. Ensure that you've got sufficient documents for import VAT claims
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 VAT Act;
· 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.
For imports, you claim the VAT you pay to Customs.
You must do this:
· On the release notification;
· With other documents, as it's laid out in the Customs Control Act
· With a receipt from Customs which indicates that you've paid the VAT; and
· A statement from your clearing agent.
So, those were 3 things to do in guaranteeing your input tax claim. But don't you want to learn more useful information on input tax
, alongside other useful tax information such as tax invoices, exempt supplies, and zero-rated supplies etc.? If so, then get your hands on the Practical VAT Loose Leaf Service