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Six transactions I'll bet you didn't know you couldn't claim input tax on...

by , 22 December 2014
At this time of year, a lot of companies hold office Christmas parties. They believe these end of year functions are a great way to show appreciation to employees, help boost morale and enable employees to get to know each other.

But we've noticed over the years that while employers throw these parties, they also want to know about the Vat implications of holding them.

And one question that always crops up is: 'Can I claim input tax on my office Christmas party?'

Sadly, the answer is 'no'.

In terms of Vat law, you can't claim input tax on most expenses relating to entertainment. Since a Christmas party is a form of entertainment, you can't make a claim on the cost of meals, venue hire, cost of serving staff and the cost of a band.

But your office Christmas party isn't the only transaction you can't claim input tax on. Keep reading to discover six more transactions you can't claim input tax on so you won't land on the wrong side of SARS.


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You also can't claim input tax on these six transactions

 
According to the Practical Vat Loose Leaf Service, you can't claim input tax on:
 
#1: Staff refreshments. This includes coffee, tea and soup;
 
#2: Staff canteens (where you don't recover the costs from your staff);
 
#3: Municipal rates (they're zero-rated);
 
#4: Car rental, unless it's a single cab bakkie;
 
#5: Country club memberships; and
#6: Holiday homes.
 

If you claim input tax on these transactions, SARS will reject them

 
If you claim input tax on these transactions, SARS will reject them off the bat and charge you penalties.
 
In this article, we explain that, if you've claimed Vat on entertainment you shouldn't have and SARS finds out, it will reverse the deduction and penalise you 10% and monthly interest.


What's more, getting this penalty also puts a 'mark' on your behaviour. And this means SARS will audit you frequently because it won't trust you with your Vat affairs anymore. It will want to see what else you're doing wrong.
 
Recommended Product: Input Tax 101 e-Report. In it, you'll discover:
 
  • 7 items you can claim input tax on;
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  • 5 exceptions to the rule against entertainment expenses;
  • 13 Motor vehicles you can claim input tax on; and
  • So much more you need to know about input tax.
 

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