Results 1 to 7 of 7

Thread: Registering for VAT when earning commission??

  1. #1
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    262
    Thanks
    52
    Thanked 39 Times in 35 Posts

    Registering for VAT when earning commission??

    Am I missing something: is someone who earns commission, and receives an IRP5 yearly, supposed to register for VAT?

  2. #2
    Bronze Member Beancounter's Avatar
    Join Date
    Oct 2011
    Location
    Pretoria
    Posts
    118
    Thanks
    19
    Thanked 29 Times in 24 Posts
    Did a client ask you about his "VAT" meaning his Income Tax? I get that all the time.

    A person may well be trading (individual or company) and may also receive IRP5's. Refer Personal Service Providers and Independent Contractors. If the trading income exceeds R1m per annum, they will be obliged to register for VAT. It becomes tricky when they receive IRP5 and trading income for which they prepare financial statements. They still have to charge VAT, the net amount excluding VAT will be reflected on the IRP5 and PAYE will be calculated on that amount.

  3. #3
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    262
    Thanks
    52
    Thanked 39 Times in 35 Posts
    Did a client ask you about his "VAT" meaning his Income Tax? I get that all the time.
    No, I have his VAT103 in front of me, he is definitely registered for VAT.

    If the trading income exceeds R1m per annum, they will be obliged to register for VAT.
    The only income that he earns is his commission. Is that seen as trading income? This is also not a case of an independent contractor.

  4. #4
    Bronze Member Beancounter's Avatar
    Join Date
    Oct 2011
    Location
    Pretoria
    Posts
    118
    Thanks
    19
    Thanked 29 Times in 24 Posts
    First of all, give SARS a call to establish whether the VAT registration is still active. He may have traded some time ago and never cancelled the registration when he took up a job and started working for commission. SARS could have cancelled the registration due to no trading income being declared. If the registration is still active, there may be returns outstanding.

    VAT registration is applicable to businesses including sole proprietors, partnerships, trusts, companies etc. If he is not carrying on a business anymore but is now an employee earning commission, then his income is no longer subject to VAT. In that case he may want to cancel the VAT registration using form VAT123. He will have to declare whether he stopped trading or sold the business and supply relevant required information. All outstanding returns will have to be filed and any outstanding assessments paid.

    If he chooses to retain the VAT registration number, the bi-monthly nil returns will have to be filed continuously. SARS may however opt to cancel his registration due to non-trading.

  5. Thanks given for this post:

    Dave A (25-Jul-14)

  6. #5
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    262
    Thanks
    52
    Thanked 39 Times in 35 Posts
    Thank you for your feedback Beancounter.

    The taxpayer was only registered last year, and is still active.

    So you agree with me that he cannot be registered based on the fact that he receives commission income only?

  7. #6
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    The commission is not earned in the "furtherance of an enterprise" and therefor falls outside the scope of the VAT act.

  8. Thank given for this post:

    Beancounter (25-Jul-14), dellatjie (25-Jul-14)

  9. #7
    Silver Member
    Join Date
    Sep 2012
    Location
    Louis Trichardt
    Posts
    262
    Thanks
    52
    Thanked 39 Times in 35 Posts
    Thank you Clive.

    I had it that way too, but met up with an old colleague recently, but she differed with me, saying that he should be registered, which made me doubt myself.

    Quite an adjustment not having a partner to run to and ask if you are unsure about something...

Similar Threads

  1. Registering for VAT
    By Newretailer in forum General Business Forum
    Replies: 1
    Last Post: 29-May-13, 09:45 PM
  2. Earning more than 10k online?
    By Evert in forum Business Online Forum
    Replies: 13
    Last Post: 11-Apr-13, 06:48 PM
  3. [Article] Registering a company
    By Dastan Kieton in forum Entrepreneurship and Business Management Forum
    Replies: 0
    Last Post: 22-Oct-12, 03:21 PM
  4. [Question] Unemployed but earning interest: When does tax start?
    By JohnApple in forum Tax Forum
    Replies: 2
    Last Post: 18-May-12, 01:22 PM
  5. [Question] Registering for VAT
    By Newretailer in forum General Business Forum
    Replies: 9
    Last Post: 19-Dec-11, 01:36 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •