The VAT law lets you claim input tax on the supplies you need to buy in order to run your business. But you can't claim input tax on everything.
There are five forbidden items you can't claim on. And if you do, SARS will not only reverse your input tax deductions. They'll also slap you with a 200% penalty, plus interest and fines. And they'll conduct a VAT audit on your business that could go as far back as five years into your records.
But I don't want you to get in that situation. Here are five forbidden items you must never try and claim input tax on.
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Never try claim input tax on these five items
If you don't run a car dealership or operate a car rental enterprise, you can't claim an input tax
deduction when buying a car. This goes for car rental too.
You can't claim input tax
deductions on entertainment. This includes refreshments for your staff such as coffee, tea, cookies, boardroom lunches, customer entertainment, year-end parties and other functions.
3.Any supplies you can't substantiate with a tax invoice
Don't claim the VAT
on any supply that's worth more than R50 that you can't substantiate with a valid tax
invoice. Here's what a valid tax invoice should have on it.
Read on for two more items you can't claim input tax on…
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Did you know: SARS must refund your VAT within 21 business days?
Any taxpayer will, at some stage in his lifetime, have heard someone say that when you must pay SARS, you must pay at once. But when SARS must pay you, it takes forever!
Have you experienced the truth in this statement by ever filing a VAT return that results in SARS owing you? If so, you are one of many, many VAT vendors who either have not received their refund, or, who have received it but only after waiting for ages!
SARS has 21 days to refund you!
We show you how to get your refund in time, or charge SARS interest in The Practical VAT Loose Leaf.
Never try claim input tax on these five items continued…
You can't claim input tax
on renting a place as a private home. This is also if you buy the property as a residential property.
5.Transport by road and rail
You can't claim VAT
back on local public road or rail transport. They're exempt supplies.
To top it off there are six other items SARS forbids. We cover these in the Practical VAT Loose Leaf
Service. Don't have your copy yet? Click here
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Be 100% sure about every input tax claim you submit!
Most VAT vendors make one of two big mistakes when claiming their input tax.
1. Don't know about certain input tax deductions which SARS allows, and then lose out on important cash flow savings for the business; or
2. Claim when they shouldn't and face SARS penalties and assessments!
Don't make the same mistake. Here's the only tool you need to be 100% sure about all your input tax claims
Did you know you can claim input tax on flowers you send to your sick staff? It's true! Make sure you claim all your input tax and put money back into your business. We discuss how you can take advantage of every input tax deduction available at the VAT Masterclass.