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Two common mistakes when claiming input tax and how to avoid them

by , 09 May 2016
Every day, employers are taking unimaginable risks with SARS on their input tax claims. Because all it takes is just one little mistake and SARS will deny it!

Not only that, but they'll come at you with harsh penalties and interest if you don't get it right!

So to help you ensure that your input tax claims are correct every time, here are two of the most common input tax claim mistakes around, along with tips on how to avoid them...


If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
·         Your books and records comply with the requirements of Section 55 of the VAT Act;
·         You didn't claim on exempt supplies;
·         Any of your claims were for non-taxable supplies;
·         You apportioned inputs correctly and at the right tax rate (Sections 16, 17 and 20 of the VAT Act);
·         And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.

Mistake#1: No or invalid invoices

Countless employers have messed up because of this one little error. So let's make this clear:

You need a valid tax invoice to prove your input tax claim to SARS. And if you don't have the tax invoice, or if it's not valid, then you can't claim the credit. It's that simple.

If you claim input tax without a valid tax invoice, then SARS will charge you understatement penalties of at least 25% of the VAT you claimed on the invalid tax invoice.

Or you could be like VAT Case 789, North Gauteng High Court, 10th September 2012, in which an understatement penalty of as much as 200% was dished out, with interest, for not being able to provide valid tax invoices.

Mistake#2: Insufficient documents for imports

For imports, you can claim the VAT you pay to Customs. But you can only do this if you've followed procedure correctly.

To do this, you must claim the VAT:

·         on the release notification;
·         with other documents, as is laid out in the Customs Control Act;
·         with a receipt from Customs that shows you've paid the VAT; and
·         with a statement from your clearing agent.
*Those were two common mistakes when claiming input tax, as well as tips on how to avoid them.

To learn more, page over to Chapter I 03: Input tax in your Practical VAT Loose Leaf Service handbook, or click here to order your copy today.  

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