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You can apportion input tax to passenger transport in certain contexts. Read on to learn more...

by , 11 February 2016
The fare received by passengers for their use of rail or road transport is exempt from VAT, and so you can't claim input tax on services for the fare.

But there is other income which rail and road operators can receive, and which is subject to VAT (provided VAT has been registered for of course).

This could include transport of goods, parking fees, or even operating a food stall etc.
Having said that, here is a practical example to help you understand more...


The Railway Club operates weekend trains on the West Coast.

They have a restaurant and a bar on the train. They also have parking fees in place, which they charge their passengers.

The year which ended on Spetemeber 2014, their income is as follows:

Train tickets: R1 050 000.00

Restaurant income: R950 000.00

Bar sales: R1 100 000

Parking fees: R800 000  

It's advised that the Railway Club registers for VAT because their total income from the restaurant, bar and parking fees exceeds R1 000 000.

What's more, they realise they should've registered for VAT as of July 2014, as this is when their income exceeded the R1 000 000 mark.

So, the Club registers for VAT. Now they must declare output tax from the input from the restaurant, bar and parking fees.

In addition, they can claim input tax on all expenses relating to them.

Keep reading to learn important notes on the above-mentioned…

In 2016 the government expects to collect R284 billion from VAT, up by 10% compared to 2015. 

Considering VAT is the second source of income to the consolidated budget, your 2016 VAT returns are now SARS' favourite target for audits!
Don't let this happen to you.
Attend the VAT Masterclass 2016 and get detailed info on the VAT201 form and how to complete it correctly so SARS doesn't turn its attention on you.
Book your seat today

· The Club DOESN'T include the income from the train tickets in determining their R1 000 000 turnover.
Also note that, once registered for VAT, the Club CAN'T claim input tax on any expenses and purchases relating to the train itself, because the passenger transport (ticket income) is exempt from VAT.

· If your tickets INCLUDE meals and refreshments, then you must treat these as PART OF the exempt supply.

*To learn more useful information on VAT regarding passenger transport, page over to chapter P13: Passenger Transport in your Practical VAT Loose Leaf Service, or click here if you don't have it yet.

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