If you're in the insurance industry, you most likely have brokers who sell your insurance products. And you pay them commission on these sales.
But because of various admin problems, it often happens that you haven't received the tax invoices from your brokers by the time you need to complete your Vat return.
You can't work out the Vat on the commission. And you can't claim the input tax.
So, SARS issued a Binding General Ruling that allows you to claim input tax with tax invoice alternatives.
Read on to find out how to treat the Vat on insurance brokers and get the input tax due to you!
If you supply short-term insurance, you no longer need a tax invoice
Don't do another Vat transaction until you've read this!
This one letter can give SARS licence to grab money right out of your business bank account
Don't let this happen to you...
SARS says you don't need a tax invoice, credit or debit note, for the supply of short-term insurance (Sections 20(7) and 21(5) of the Vat Act).
But there are conditions to this.
When you give out an insurance policy, the document must have the following:
Both your name and the name of your client;
Your client's address, Vat number and the policy number;
A statement confirming SARS' direction that a vendor to issue a tax invoice or a debit or credit note in a different format than usual (Section 20(7) and 21(5) of the Vat Act);
The amount of the insurance premium indicating either:
- The value of the supply, amount of Vat and the total amount; or
- The total premium including Vat together with a statement that Vat is included.
And give your clients who are Vat vendors a statement saying they can claim the Vat they pay as input tax. And he must have the policy documents together with proof that he paid the premium (for example, bank statements).
And read on for when you can actually ignore part of the Vat Act.
If you supply related intermediary services, you can ignore a section in the Vat Act
Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!
The truth is brutal! Even if it wasn't you who made the mistake, it may be you who'll bear the consequences.
If SARS has found inaccuracies, you will be assessed, held liable to penalties and interest and possibly even additional tax! You may even be prosecuted!
SARS says the following documents don't have to contain the words 'tax invoice', 'credit note' or 'debit note', as is required by Sections 20(7) and 21(5) of the Vat Act
· The document which shows the amounts collected on behalf of the short-term insurer;
· The fees payable for intermediary services supplied; and/or
· A commission statement the intermediary gives you for supplying their services.
Just make sure it shows the same information as the point above.
And that's all! Now you don't have to wait for long periods anymore before you claim your input tax.
For everything you need to know about staying 100% legally compliant with all your Vat issues, minus all the legalese, you need to get your hands on the Practical Vat Loose Leaf
. Check it out here…