Will the VAT threshold change?

[Dave A]

I'm starting to wonder if the VAT threshold will be changed after all.

Currently it is at R300 000.00, but it is quite a while since Trevor Manuel's announcement that the threshold will increase to R1 000 000.00. That, of course, was based on certain expectations about the growth of the economy which I think were fairly optimistic.

Even the tax professionals haven't heard any rumblings about an expected implementation date.

Maybe if it is changed, it will only go to R500k.

Any other opinions?

[Pap_sak]

last year I did around 200K - this year it looks like 400K+

When must you get registered - when you know you going over 300K or when you have gone over?

I little while ago they where talking about a new tax system for small companys working on turnover not profit - it looked quite good but did it included the vat aspect?

[Dave A]

You must get registered when you have, or expect to have a turnover in excess of R300k per annum. I'd expect it's your declared turnover for income tax purposes that is going to trip the "VAT threshold detector," so you'll need to look quite closely at your financial year-to-date figures.

On a previously declared turnover of R200k I doubt you'd have any resistance from SARS if you did a voluntary VAT registration if you're getting close. You're in retail, so the fun part is you'll be doing a valuation of your stock on hand, etc and could be in for a refund on your first VAT return. The downside of being deregistered is the possiblity of reversal of that little windfall to the cashflow.

[Pap_sak]

Thanks for that Dave, guess I have to do it then. Are there any advantages for a profitable company to be vat reg? Can see the advantages if you losing money....

[Dave A]

My view is that is mainly affected by how many of your clients are registered as VAT vendors. There are other views on whether to register for VAT here.

Thinking about it now, that issue of value on hand might be another reason we're not seeing any announcements on the threshold change.

[Pap_sak]

Thanks for that - read that thread - as I thought it's not going to do me any favours. At least operating cost will come down a bit...

Is there a good thread on sole prop Vs CC's? - If I am going the whole hog it might be worth changing, although have been happy to be a sole prop so far. estimate for turnover is around the 400 - 600k mark.

[Dave A]

Is there a good thread on sole prop Vs CC's?

Not yet. It might be an idea to start one to massage all the angles

But a related thought iro VAT registration - I'd strongly recommend not being a sole proprietor at VAT registration time. It's pretty invasive and under some circumstances have less than desirable consequences as all your income generating activities are dragged into the same net. An example is if you were renting a portion (e.g. a granny flat) of a property you owned and was living in. The rental income would attract VAT.

[marco]

I am well over R300 000.00 and have had no flack from SARS for not paying VAT.

Why does the R1M threshold have to be tabled?
Trevor's Budget Speech also stated:
State pensions are to be increased.
Sintax is to be increased. etc.

All this has already been implemented so why question the VAT threshold? If he said so in his speech, then it is so.

Correct me if I am wrong.

[marco]

I must also add that SARS will not want businesses to deregister from VAT as they will "disappear from their radar"
This is why SARS has no link to it.