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Seven instances where you'll have to issue a valid tax invoice

by , 19 July 2013
The most important link in the Vat chain is your tax invoice. Get it wrong and you won't be able to deduct input tax on your purchases. What's more, if you issue a defective tax invoice, or fail to issue one within 21 days of making a supply, you could face two years in jail, or face a fine for R80 000. Read on to discover the seven instances where you must issue a valid tax invoice so you can comply.

The Practical Vat Loose Leaf Service defines a tax invoice as a special document required by the Vat Act.

In order to avoid hefty penalties, you must issue a valid tax invoice in the following instances so you can substantiate your claims:

You'll need to issue a tax invoice in these circumstances:

  1. If the transaction is for more than R50, you need a valid tax invoice to claim for it.
  2. If the transaction is between R50 and R5 000, an abbreviated tax invoice is acceptable.
  3. You must issue a tax invoice to the recipient within 21 days of the sale.
  4. Standard-rated tax invoices (where Vat is charged at 14%) must always be issued in South African currency.
  5. Zero rated tax invoices (where Vat is zero rated) may be issued in a foreign currency.
  6. You must issue a full tax invoice for any zero-rated supply, even if the value of the supply is less than R5 000.
  7. If the consideration (i.e. the full sale amount including Vat) charged for the supply exceeds R5 000, you're legally obliged to issue a full and proper tax invoice.

Remember that while you don't need a tax invoice for transactions below R50, you'll have to keep some kind of evidence of the transaction, like a till slip or petty cash slip, which you can use to substantiate your input tax claim.

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