Revealed: The golden rule to calculating your Vat correctly
Many Vat vendors think calculating Vat is a complicated process. But, the truth is it's not, especially if you stick to this golden rule...
Calculating your Vat for the first time and aren't sure of what's due to you and what to pay over to SARS? Don't worry, there's a simple process to do this.
Use this rule to calculate your Vat
The Practical Vat Loose Leaf Service says if you're calculating your Vat for the first time, all you need to know is:
'Vat charged on supplies you made (output tax) less Vat paid to your suppliers (input tax) = the amount of Vat payable/refundable.'
Basically, if your input tax exceeds your output tax, you're entitled to a refund. But if your output tax exceeds your input tax, you'll have to pay over the difference to SARS.
This amount represents your Vat liability, which is the amount you owe.
You're required by SARS to submit a Vat return, whether you have to pay them or they must pay you.
Once you calculate your Vat and work out your Vat liability or the amount you'll be refunded, complete the return and submit it to SARS.
Well there you have it. With this golden rule you'll never go wrong when calculating your Vat.