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Seven things you may not know about exempt supplies

by , 15 August 2014
Experts behind the Practical Vat Loose Leaf Service say Vat exempt supplies are supplies that are exempt of tax.

Sounds simple enough right? Not quite.

There's a lot more to Vat exempt supplies.

There are seven things you may not be aware of when it comes to Vat exempt supplies. Read on to find out what they are so you can handle these supplies correctly and avoid SARS penalties.

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Seven things you need to know about Vat exempt supplies

#1: Exempt supplies are non-taxable supplies.

#2: They're similar to supplies made by non-Vat vendors, which aren't taxable.

#3: If you make an exempt supply, you can't claim an input tax deduction on related expenses of goods or services.

#4: Exempt supplies don't form part of your taxable turnover.

#5: If you only make exempt supplies, you can't apply for registration as a vendor as you don't qualify as one.

#6: An exempt supply doesn't need special documentary proof as you won't make any tax claims.

#7: Exempt supplies are the following:
  • Supplying financial services (such as loans, life insurance, levying of interest);
  • An association not for gain which supplies goods which were donated to it; and
  • Letting of residential accommodation.

To get a full list of the eleven Vat exempt supplies, check out this article.

Always remember this golden rule when it comes to exempt supplies: There's no output tax, no input tax and no tax invoices. Tax doesn't apply at all in this case.

Now that you know all this information about exempt supplies, make sure you handle them correctly so you can avoid SARS penalties.

PS: If you need more information on exempt supplies, be sure to check out the Practical Vat Loose Leaf Service. And if you have questions on these supplies, ask our experts at the Accounting & Tax Club.

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