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Slash your Vat bill with this input tax tip...

by , 07 March 2013
As a Vat vendor, it's your right to claim input tax - as long as you can prove your claims and back them up with all the required documentation. But if you make just one mistake with your input tax claim or try to claim input tax on items that don't qualify for input tax, SARS will deny it. It'll slap you with penalties and interest!

Your mission is two-fold: You have to avoid silly mistakes.

And you have to look for every possible legitimate input tax claim, to lower your Vat bill.

Here's one such tip you can put into practice today!

Let your bank charges shrink your Vat bill

Claim back the Vat on bank charges as input tax.

Yip, that's right! You can save quite a bit for your business. I'll show you how below...

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The 2008 Companies Act says requires you to perform solvency and liquidity ratios on your annual financial statements.

This sounds like an extremely good idea because if your solvency and liquidity ratios are high, your business will have enough cash in it fulfill all its obligations.

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When you receive your bank statement, look for bank charges marked with a '*, #' , or similar mark.  These marks indicate the bank charges which include Vat. So all you have to do at the end of the tax period is add up all these charges, multiply by 14/114, and you have some extra input tax you can claim.

Write the amount in block 15 on your next Vat return.

And don't worry about where you're going to find the documentary proof to prove this input tax claim. Remember, your bank statement usually contains all the details of a valid tax invoice. But, if it doesn't, then ask your bank for one!

Remember, if you haven't claimed this before, you can claim all the Vat on your bank charges, going back for the last five years.

But bank charges are just one of 16 items you can legally claim input tax on to slash your Vat bill.

+++ Get rid of your poor performer without landing at the CCMA! +++

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7 more items you can claim input tax on

Here are some examples of business costs that you can claim the input tax on:
  1. Trading stock;
  2.  Raw materials;
  3. Manufacturing overheads;
  4. Administrative overheads;
  5. Marketing expenditure;
  6. Fixed assets; and
  7. Fixed property.
But, there are more items you must be aware of that you can claim input tax on that I haven't mentioned here.

The Practical Vat Loose Leaf  will show you
  • When and how to claim your input tax
  • Two things you must do to guarantee your input tax claim
  • 7 items you can claim input tax on
  • 9 more items you CAN claim input tax on, but didn't know about
  • 5 exceptions to the rule against entertainment expenses
  • Motor vehicles you can and can't claim input tax on
  • And much more

I sure hope you'll be putting this great input tax tip into practice today!

Until next week

Philip Rosenberg

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