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Thread: New VAT guide

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    just me duncan drennan's Avatar
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    New VAT guide

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    Site Caretaker Dave A's Avatar
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    Any significant changes?
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    just me duncan drennan's Avatar
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    Here is a synopsis on the changes (3rd page of the new guide)

    1. Tax invoices – the threshold for a full tax invoice increased from R1 000 to R3 000. The VAT registration number of the recipient must also be reflected on the document from 1 March 2005 to constitute a valid tax invoice for the purposes of claiming input tax.
    2. Small retailers VAT package (SRVP) – simplified administrative, accounting and recordkeeping rules were introduced to address the concerns of certain small businesses.
    3. Public authorities – the VAT status and treatment of government departments and public entities listed in the Public Finance Management Act, 1999 (“the PFMA”) was clarified. The PFMA is now used as a mechanism to determine whether a public entity should be regarded as an enterprise or not. Departments and public entities listed in Schedules 2, 3B and 3D of the PFMA will generally be enterprises, whereas those listed in Schedules 1, 3A and 3C will generally not be enterprises.
    4. Skills Development Levy (SDL) – SDL payments are no longer regarded as being inclusive of VAT. Employers may therefore not claim input tax on their SDL payments with effect from the April 2005 SDL period.
    5. Transfer payments / grants – the nature of certain payments from government were further clarified to make it clear which payments qualify for the application of the zero rate, and which are regarded as being in respect of goods or services supplied at the standard rate. The definition of the term “transfer payment” was also deleted with effect from 1 April 2005 and replaced with the term “grant”.
    6. Municipalities (local authorities) – the breakeven test for determining whether certain supplies by municipalities would be taxable or not is no longer applicable from 1 July 2006. Municipalities are essentially now treated on the same basis as ordinary businesses.
    7. Zero rating – the list of zero rated goods and services has been extended. An important change was the zero rating of municipal property rates from 1 July 2006. The documentary proof to be held by vendors where the zero rate has been applied, has also been clarified in Interpretation Note No. 31.
    8. Tax periods – a new four monthly tax period known as category “F” was introduced for small business.
    9. Foreign donor funded projects – the registration of entities and the allowance of input tax in respect of projects funded by certain foreign donors has been incorporated into the law.
    10. Welfare activities – the list of activities which are regarded as being welfare activities conducted by a welfare organisation has been revised and extended, and are now specified in a Regulation.
    Last edited by duncan drennan; 04-Apr-07 at 10:17 PM.
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    just me duncan drennan's Avatar
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    I think there are two important points to note in the changes,

    Tax invoices – the threshold for a full tax invoice increased from R1 000 to R3 000.
    Just as it says, tax invoices with a value of less than R3000 do not need to carry your (the purchasers) VAT number (and some other info). See pg 61 of the guide for the definition of a "Full" and an "Abridged" tax invoice.

    Tax periods – a new four monthly tax period known as category “F” was introduced for small business.
    This may be relevant to your business. If you earn under R1.2mil pa (and do no conduct business under different VAT registered branches), you can qualify for this category.
    Last edited by duncan drennan; 04-Apr-07 at 09:48 PM.
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    Site Caretaker Dave A's Avatar
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    Thanks and well done, Duncan
    The trouble with opportunity is it normally comes dressed up as work.

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