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Vat basics: Follow these three steps when processing business travel expenses

by , 12 September 2014
Is processing business travel expenses adding to your Vat headache?

If so, this article is for you.

Our Vat experts have done all the hard work for you and today, they reveal three steps you must follow when processing business travel expenses.

Read on to find out what these three steps are so you can process business travel expenses seamlessly.

Three steps to follow when processing business travel expenses

Experts behind the Practical Vat Loose Leaf Service recommend you follow this simple, logical procedure to ensure you never overlook valid deductions, or make mistakes when you process business travel expenses:

Step #1: Make sure your employee meets the criteria

In this article, we explain that the condition for claiming input tax on business travel is: You (director), your business partner or your employee must have spent at least one night away from your usual residence and place of work for business purposes.

Only if the business travel meets this requirement can you recoup any of your business travel costs through the input tax claim.

We're not done. Here are two more steps you must follow…

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Step #2: Collect all invoices and ensure they're100% correct

The most important link in the Vat chain is the tax invoice and if it's incorrect or incomplete in any way your input claim will collapse. So insist on valid invoices from all your suppliers before payment.

You can claim input tax on tax invoices in the name of your business (with your Vat number if over R5 000) or in the name of a director, partner or employee because they're acting as your agent in acquiring goods and services for your business.

Step #3: Work through the invoices and claims

Once you've checked that:
  • Your employee was away from the place of residence and business for at least one night, and
  • He did submit invoices for all travel expenses, and
  • These invoices are valid and will support any input tax deduction.
  • Then you can consider the various claims and determine what you can and can't claim.
It's that simple.

Following these three steps will help ensure you process business travel expenses seamlessly.
PS. Here are 34 Input tax savings you could be missing out on…

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