Retirement homes: Know the consequences of selling goods on behalf of other people

It's crucial that you account for your tax invoices correctly if you sell goods on behalf of other people in your retirement home.

How do you go about doing this?

Here's what to do if you sell goods on behalf of other people in your retirement home

If you display paintings, embroidery, crochet and other art works in your retirement home and sell them on a commission basis, do the following…

The Practical Vat Loose Leaf Service explains that if the artist isn't a vendor, you mustn't issue a tax invoice to the customer.

Simply issue a tax invoice to the artist for the commission you charge (including Vat).

The commission (and not the selling price of the item) must be included in the amount on which you calculate output tax.

What if the artist is a vendor?

If the artist is a vendor, you may issue a tax invoice to the customer.

Don't include the price of the painting in the amount on which you calculate output tax. Calculate your output tax on the commission you charge the artist only, and give a copy of the tax invoice to the artist with the money (including Vat).

The artist is the principal regarding the sale of the art and must declare output tax on the selling price. You'll be acting as his agent. He will claim input tax on the Vat on your commission. Usually, you'll deduct your commission (including Vat) from the amount paid over.

Now that you know the consequences of selling goods on behalf of other people in your retirement home, make sure you account for your invoices correctly to avoid getting on the wrong side of SARS.

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