HomeHome SearchSearch MenuMenu Our productsOur products

Secondhand goods: How to deal with supplies for less than R1 000 and supplies for more than R1 000

by , 12 September 2013
Although you don't charge any Vat on secondhand sales, there are some important rules to follow to comply with the Vat Act. Read on to find out how to deal with supplies for less than and more than R1 000...

Secondhand goods are goods that have been previously owned and used. As you know, no Vat is charged on the sale or purchase of secondhand goods.

But if you sell secondhand goods, you'll need to record some important details relating to the transaction, in just the same way as you would need to issue a fully valid tax invoice for the sale of a taxable supply, says the Practical Vat Loose Leaf Service.

These kinds of sales are differentiated into two types. And each one has slightly different requirements:

  1. Supplies for less than R1 000; and
  2. Supplies for R1 000 or more.

Let's take a closer look at how to deal with each kind of supply.

This is how you must manage supplies for less than R1 000

When dealing with supplies for less than R1 000, you'll need to keep a written record that reflects the following important items of information relating to the sale:

The name, address and ID number of the supplier or seller (if it's a company, then get the details of a representative person). Remember to verify the ID number by checking it against the original document – don't just accept the seller's word for it.

  • The date of acquisition
  • The quantity or volume of the goods
  • An accurate description of the goods
  • A declaration by the supplier that the supply is not a taxable supply
  • The consideration for the supply (i.e. the price charged or paid for the goods).

Here's a useful tip: The Practical Vat Loose Leaf Service recommends you use to record all this information and ensure you don't forget to record anything:

Use the official form VAT264. It incorporates the declaration by the owner of the goods and makes sure the record will be complete so you can claim your notional input tax on the transaction.

But what about supplies for R1 000 or more?

Use this method to deal with for more than R1 000

If you sell the secondhand goods for R1 000 or more, then, in addition to the details listed above, you'll have to record two more particulars for your records:

  • You must make and keep a copy of the supplier's ID (again, if the supplier is a Close Corporation (CC) or company, then get these details in respect of a representative person).
  • If you're dealing with a CC or company, then you must request and keep an official business letterhead or similar document that shows the name and registration number of the business you're dealing with.

It's that simple. With this method, you'll never get the treatment of secondhand goods wrong.

Vote article

Secondhand goods: How to deal with supplies for less than R1 000 and supplies for more than R1 000
Rating:
Note: 5 of 1 vote


Related articles




Related articles



Related Products