[Question] Input tax amount on report

[Kathy1]

I am using Pastel Express v12 and while getting the reports ready for VAT payment I noticed that the Input amount on my Tax Report is different to the COS amount on the Income Statement, is this correct?

[Miro Bagrov]

The VAT Control Account is where the numbers come from for the VAT Submissions.

They come from the cashbooks where you specified which transactions contained VAT and which did not.

That is how I understand it.

[Elijah]

Hi Kathy

Yes, it's correct. The Input Vat will be update when you capture a supplier invoice, but the cost of sales will not be updated at this point. It will only update when that particular product is sold, hence the name "Cost of Sales". This is assuming you using the perpetual inventory system.

[Miro Bagrov]

The other reason why 14% x COS can't equal VAT input is that not everything in COS contains VAT.

If one of your suppliers is not registered for VAT you can't claim input VAT.
If you produce food and you bough brown bread, that is zero rated, no VAT.
Fuel does not have VAT although it sometimes finds it's way to COS...
etc.
(Ref. to VAT Act.)

[CLIVE-TRIANGLE]

The other reason why 14% x COS can't equal VAT input is that not everything in COS contains VAT.

Yes, and not everything that bore VAT is COS.

In fact, there is no VAT on COS, despite SARS' contention otherwise. There is VAT on purchases and if there are no sales, there is no COS, but there may have been input VAT because the items purchased are still in stock.

Conversely, if you sell stock you bought previously, you have COS but no VAT thereon.

[Kathy1]

The VAT Control Account is where the numbers come from for the VAT Submissions.

They come from the cashbooks where you specified which transactions contained VAT and which did not.

That is how I understand it.

Thank you

[Kathy1]

Thank you