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Six things your credit note must contain to get SARS' approval

by , 06 November 2014
When you give your clients credit notes, you have to be 100% sure they contain the right information. After all, these documents are as important as your tax invoices.

If you get this information wrong, SARS might think you deliberately accounted for your Vat incorrectly and it will penalise your company harshly for it.

To help you avoid this catastrophe we're revealing the six thing that MUST appear on your credit note...

 

If your credit note doesn't contain the following information, SARS will see it as invalid

 
1. The words 'Credit Note';
2. The name, address and Vat number of the supplier ( you) and recipient (your client);
3. The date of issue;
4. The amount of the supply and the Vat;
5. A brief explanation as to why you issued it. Be as specific as you can. For example, state if it was for a 'payment on delivery' discount or a refund because of broken goods; and
6. Information sufficient to identify the transaction to which it refers (e.g. a reference to the original tax invoice). But be careful! There are certain situations when your credit note shouldn't refer to the original tax invoice. You can find examples of these situations here.
 
Just remember, if you cancel a tax invoice before you issue it, you must also keep all the copies of the cancelled invoice.
 
Here's what will happen if you don't have all the right information on your credit note.
 
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By using these two simple Vat tips, I saved my company R75 327 last year.
 
I thought I was claiming every possible input tax credit, but… I didn't know I could claim back input tax on my short-term insurance premiums… it saved me R8 070 last year.
 
I also didn't know I could claim Vat on domestic air tickets… it saved me R67 257!
 
Click here to find out how you can save money on your Vat.
 
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Here's how SARS treats credit notes that don't have all this information

 
If your credit note doesn't have this information on it, SARS will reject it. Without a valid credit note, you can't substantiate the reduction in Vat.
 
This means SARS may still expect your company to pay Vat.
 
As a result, you'll have to pay that Vat out of your own pocket and end up making a loss.
 
So ensure your credit notes contain the right information so SARS doesn't reject them. 
 


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