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To claim notional input tax, you must fulfil these seven requirements

by , 08 October 2014
When you buy supplies for your business, you pay Vat. This is called input tax and you can claim it back from SARS.

Now, if you buy second-hand goods for your company, you'll still pay input tax. But did you know you can also claim this notional input tax as well.

To do this, you have to meet these seven legal requirements. Without them, SARS will reject your claim, charge you penalties and they might even do a Vat audit on your company.

 

Seven requirements you must fulfill to claim input tax on second-hand goods

 
1. The goods are definitely second-hand (i.e. previously owned and used) and not animals, gold coins or 'old order' mining rights.
 
2. The supply isn't a taxable supply. I.e: you bought it from someone who isn't a registered Vat vendor.
 
3. The supplier (seller) is a South African resident and the goods are in South Africa.
 
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4. You paid for the supplies (remember SARS only allows input tax if you make the payment).
 
5. You must keep all the transaction records and details.
 
6. You must calculate the input tax by multiplying the tax fraction (14/114) by the amount of the consideration paid for the goods, or the open market value, whichever is the lesser.
 
7. For fixed property sales before 10 January 2012, you can only claim input tax equal to the transfer duty paid. And you can only claim it when the transfer duty or stamp duty is paid.
 
Don't try to claim notional input tax if you don't fulfil these seven requirements. If you do, it will land you with serious penalties.
 
PS. If you're doing an input tax claim, use the steps in the Vat Refund Accelerator to get your money back from SARS within 21 days.
 


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