Results 1 to 6 of 6

Thread: Back claiming Vat on development costs

  1. #1
    New Member
    Join Date
    Aug 2014
    Location
    Johannesburg
    Posts
    1
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Back claiming Vat on development costs

    Hi
    We are a newly registered company and are in the process of developing a tourism facility with high development costs. We are not yet generating a turnover as that will only happen once the development is complete and can consequently not yet register for Vat. We would obviously like to be able to reclaim the Vat on the development costs and would like to know whether it would be possible to back-claim Vat and for how far back?
    Thanks!

  2. #2
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    5 years back, I believe.

  3. #3
    Gold Member Houses4Rent's Avatar
    Join Date
    Mar 2014
    Location
    Cape Town
    Posts
    761
    Thanks
    7
    Thanked 55 Times in 51 Posts
    Probably best to ask SARS to be sure. Ask them three times. If you get three times the same answer you are lucky and can believe the answer.
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

  4. #4
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    It's embedded in the efiling process too. When you request a correction, and attempt to increase an input vat amount, the popup informs you that you cant and rather to add it it next cycle because you have five years in which to claim it.

    What I am not certain about is whether you would have had to be registered with a "liable for vat" date prior to incurring the expense.

  5. #5
    Diamond Member Justloadit's Avatar
    Join Date
    Nov 2010
    Location
    Johannesburg
    Posts
    2,671
    Thanks
    88
    Thanked 544 Times in 460 Posts
    Blog Entries
    1
    Even if you can not claim the VAT, the VAT portion will still affect your earning of profit. So either way it will probably be accounted for if not claimed as a reduction in your profit margin, or in your case, and increase in the carry over loss. just remember that there must always be a mention of financial support to the company, in the case that it is trading at a loss, or else you may be deemed to be trading recklessly.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

  6. #6
    Bronze Member Beancounter's Avatar
    Join Date
    Oct 2011
    Location
    Pretoria
    Posts
    118
    Thanks
    19
    Thanked 29 Times in 24 Posts
    Quote Originally Posted by CLIVE-TRIANGLE View Post
    What I am not certain about is whether you would have had to be registered with a "liable for vat" date prior to incurring the expense.
    You have to have been registered for VAT at the time to be able to claim Input VAT incurred at that date during the past 5 years. To solve niggling problems like that, you could purchase in your own name until the business is large enough to register for VAT. Lease the equipment to the business for an amount more or less equal to the annual depreciation so you don't show a profit in your personal capacity. When the business registers for VAT, sell it to the business as second-hand goods issuing a VAT264 as the source document. You will sell it at market value and not at the original cost price but that way you get the equipment etc. in the business' name and you get to claim some VAT back in terms of Section 20(8) of the VAT Act. If you're going to pay from the business' account, be sure to have a loan agreement in place to prove that the business purchased on your behalf. Journal entries alone won't suffice to prove the underlying intention. SARS may cotton on to this and bring in new legislation to close this loophole but hey, the law is there to be followed as it is at the time.

  7. Thanks given for this post:

    Dave A (20-Sep-14)

Similar Threads

  1. Claiming UIF on Retirement
    By *A* in forum Labour Relations and Legislation Forum
    Replies: 2
    Last Post: 14-Oct-13, 05:05 PM
  2. [Question] Importing and claiming back VAT
    By Praemon in forum Tax Forum
    Replies: 7
    Last Post: 06-Aug-13, 08:31 AM
  3. Claiming UIF
    By duncan drennan in forum Tax Forum
    Replies: 3
    Last Post: 02-Jan-13, 11:49 AM
  4. Problem claiming UIF
    By Dave A in forum The Whistleblower Forum
    Replies: 6
    Last Post: 25-Aug-11, 07:55 PM
  5. Claiming VAT on vehicles
    By duncan drennan in forum Tax Forum
    Replies: 0
    Last Post: 02-Apr-07, 08:22 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
  •