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Use this legal loophole to claim VAT on your clients' gifts in 2016

by , 13 January 2016
Dear reader,

You probably buy your clients gifts during the year. But just before you submit your VAT return and miss out on a potential VAT saving, you need to read this first!

You're probably thinking... SARS sees gifts as entertainment and disallows input tax claims from the onset, right? Well... not quite...

During the FSPBusiness VAT Masterclass, I found a secret loophole that's totally legal. And no one's been using this, but it's such an easy way to get more cash in your bank!

Read on to discover what this secret loophole is about claiming VAT on gifts you give your clients in 2016.

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Follow this general rule for input tax deductions
Before I tell you what the secret loophole is, you need to know the general rule.
You can deduct input tax as long as it relates to the carrying on of your enterprise. This means if you pay Vat for services that you need to run your business, you can claim back the input tax.
Now that you know the general rule, read on for the secret loophole…
Did you hear SARS denied De Beers Consolidated Mines R7 million input tax claim?
When De Beers employed local financial service providers to work out a fair price of their shares, they claimed the R7 million input tax.
But SARS denied this. And after 12 years of legal battles, the Supreme Court of Appeal agreed!
If only they'd just paid R799 for my Input Tax 101 eReport. In just one hour, they'd know this was one of seven claims SARS specifically denies.
Make sure you know what you can and can't claim input tax on with the Input tax 101 eReport!

What the VAT Act says about gifts
SARS will allow input tax on the acquisition of certain promotional gifts. For example, golf shirts, t-shirts, umbrellas, pens, calendars, desk pads, calculators etc. with your logo on it. These are gifts.
Joe Boss decides to give all new clients an umbrella bearing his company's logo. When acquiring the umbrellas, Joe Boss can claim the input tax.
He wouldn't be liable to account for any output tax as he doesn't charge the clients for receiving the umbrella.
Before you say that's still entertainment…. If your gift has your logo on it, it is a promotional gift. So if you gave promotional gifts to your clients, claim the input tax on this!
Just remember, you won't levy output tax. This is because you do not charge or receive any payment for the supply (Section 10(23)).
P.S. We've heard your requests and we're hosting a series of VAT webinars this year. If you're interested in taking advantage of a bundled offer that will give you a huge discount and guaranteed CPD points for the year, email seminars@fsp.co.za and you'll be the first to know!

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