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Thread: VAT returns

  1. #11
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by JWalker View Post
    So how do you claim VAT on e.g. insurance etc... where you dont get an invoice as such ?
    Just have the insurance contract available. (My auditors check it every year to make sure ). In terms of amount (if your financial software doesn't work it out for you automatically), take the premium you pay, multiply by 14 and divide by 114 to get the VAT portion.

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    And then your total VAT claim / payment at the end of the day is your VAT Output (The VAT on your invoices which you owe SARS) - VAT Input (The VAT you claim on expenses and other invoices).

    In theory, if you are making a profit, you should have more output than input ... but not always the case ... if you buy a lot of stock in month x, then you may have more VAT Input than what you sold (VAT Output) ... confusing enough
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    Hi Everyone,

    Thanks for all the usefull tips i really appreciate them.

    With regards to the income tax for the year i.e. 28% tax, for your income and expenditure do you exclude or include VAT from the figures for this calcultation ?

    Thanks in advance

  4. #14
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    If you are VAT registered, you exclude the VAT.

    By the way ... if you are a small company (If I remember correctly < 5mil turnover), registered as a CC, and the members have no other businesses, you could qualify for Small Business Corporation ... saves you a lot in tax ... you should check it out.
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    Vat Recon

    For Income Tax returns(IT14) for your CC/Coy a Vat recon always have to be performed. ie reconciling the input and output items for Vat, to the Income and Expenses/Assets to be declared on tax return. SARS love to audit these. And expect another assessment for under declared VAT.

    Vat is never included in income and expense figures. A decent accounting package will do this, and link it to the annual recon.
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    Quote Originally Posted by sgafc View Post
    For Income Tax returns(IT14) for your CC/Coy a Vat recon always have to be performed. ie reconciling the input and output items for Vat, to the Income and Expenses/Assets to be declared on tax return. SARS love to audit these. And expect another assessment for under declared VAT.

    Vat is never included in income and expense figures. A decent accounting package will do this, and link it to the annual recon.
    Agreed ... VAT is a balance sheet item as it is either a liability or an asset ... never an expense or income.
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    Can VAT be claimed back on Rental Deposits and Electricity Deposits and can this be deducted as an business expense?

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    Quote Originally Posted by JWalker View Post
    Can VAT be claimed back on Rental Deposits and Electricity Deposits and can this be deducted as an business expense?
    No, because it is a deposit which is an asset and should be loaded into your balance sheet. (Unless they charge VAT on the deposit which they shouldn't). Either way though ... it is classified as an asset not expense.
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    Platinum Member sterne.law@gmail.com's Avatar
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    More VAT

    Quite correct, no VAT on entertainment. As to the coffee machine and computers - all of these are expenses in order to generate income and the VAT is claimable. The concept of only direct expenses in producing a revenue is not quite correct, that is input tax for generating an item for sale. the exceptions would be let say traffic fines or obvious fronting, such as claiming taht your Harley Davidson is a delivery bike and therefore VAT can be claimed. A computer, coffee machine are all genuine expenses used to generate income, indirectly. If the EDCON chaps suggestion that IT costs are split for VAT purposes then so should electricity, rent and in fact every expense. This would be impossible and uncontrollable from the governments point of view. they probably split and apportion cost for different cost centres. Eg a business running different cost centres for incentives and bonuses might divide the rent up between 3 departments etc. in summary all VAT paid is claimable. As with any accounting cost if it is not a genuine expense or perhaps outlay is a better word, then it cannot go through the books anyway. One final pointer, fringe benefits are supposed to be VAT items.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by sterne.law@gmail.com View Post
    One final pointer, fringe benefits are supposed to be VAT items.
    As in the company must charge output VAT to the employee for the fringe benefit?

    I'd be interested to see a practical example of how that is calculated and applied in the books.

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