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Vat basics: If you're a short-term insurer, you don't need to issue these three documents

by , 16 September 2014
You're mistaken if you think you can escape the Vat net because you're a short-term insurer.

In terms of Vat law, you must pay Vat on short-term insurance. The good news is, however, you can claim back the input tax, like any other normal standard-rated supply.

The other good news is you don't have to worry about issuing the following three documents - you can claim input tax without them!

Read on to find out what these documents are.


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Three documents you don't need to issue if you're a short-term insurer


According to SARS, if you're a short-term insurer, you don't have to issue the following three documents if your annual policy document contains the information a tax invoice would (Vat numbers, date, names, addresses of the suppliers and recipients and descriptions of the services):

Document #1: Tax invoices;

Document #2: Credit notes of the supply of short-term insurance; and

Document #3: Debit notes of the supply of short-term insurance.

Basically, the proof of the payment of the premiums on your bank statement and the policy document entitles you to claim the input tax.
This also applies if you're a broker or intermediary of an insurer.

So the general rule that when you claim input tax you need a valid tax invoice doesn't apply to you because the proof of the premium payment on your bank statement and the policy document are all you need to substantiate your claims.

Knowing about the documents you don't have to issue as a short-term insurer will help ensure you don't waste your time focusing on things that don't apply to you.

If you need more information on short-term insurance and the Vat implications, be sure to check out the Practical Vat Loose Leaf Service.



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