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The golden rule of input tax claims: Use it or SARS will deny your claim and slap you with penalties

by , 16 January 2015
One of the benefits of being on the Vat system is you claiming input tax on certain items. You can, for example, claim input tax for business travel and for flowers you send staff who are sick.

But SARS will only allow your input tax claim if you follow one simple rule. If you don't, not only will it deny your claim, it will hit you with harsh penalties. And, as you know, the penalties SARS charges sometimes go up to as much as 200%.

To avoid them and make sure SARS allows your input tax claim, here's the golden rule you must follow...

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You could be missing out on 34 input tax Vat savings...

Are you sure you've claimed input tax on these five office expenses?

  1. Plants for the office;
  2. Flowers sent to sick staff;
  3. Medical bills;
  4. Promotional gifts; and
  5. Stationary orders for the office?

There are 29 other input tax claims you can use to your advantage too...
Find out what they are here and never miss out on another input tax claim again...

If you follow this golden rule, SARS will have no reason to deny your input tax claims or charge you penalties

The rule according to the Practical Vat Loose Leaf Service is: 'You must have documentary proof for every item you claim input tax for.'
'If you can't prove it, or if your records are incomplete or invalid, don't even attempt the claim,' warns the Loose Leaf Service.
You see, SARS conducts audits to verify claims. If you can't prove your claim, it will deny it and make you pay.
So what does the Loose Leaf Service mean by 'documentary proof?'
You must have a valid tax invoice.

In this article, we explain that SARS will only consider your tax invoice as valid if it contains these details:

  • The words 'tax invoice';
  • The name, address and Vat number of the supplier (airline, hotel etc);
  • Your company name and address and Vat number;
  • A serial number;
  • A date;
  • The description and quantity of the goods bought or services supplied;
  • Payment for the goods or services; and
  • The amount of Vat or a statement that says the price includes Vat and the rate of the Vat charge (i.e. either 0% if zero-rated or 14% if standard).
There you have it: To make sure SARS doesn't deny your claim and slap you with penalties, follow this golden rule.
PS: Claiming input tax isn't straightforward. Not only do you need to have the right documents to prove your claims, you need to claim input tax on the right item. That's why we recommend you get your hands on the Input Tax 101 e-Report. It will guide you so you never make mistakes when it comes to your input tax claims.

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