VAT on commission "as and when basis" policy.

[ktersius]

Commission is not a sale, it is an agent fee for having facilitated the sale.
It would be in Sanlam's interest to create a VAT invoice, as they would then have 14% claimed as VAT input.

When in doubt find out, go to SARS and pose the question. Ultimately it is not my opinion or your opinion at the end of the day, it is what SARS will do and who will be accountable when there is an issue with the VAT.
So to clear up the issue, got to a SARS office physically and get the ruling out of SARS. If Sanlam is proceduraly incorrect, then Sanlam will have a problem with SARS, and knowing the company, I think they would not risk this issue, and that the staff at ground level are not aware of the correct procedure.

Pretty sure VAT is calculated. As I said it's more the timing of the sale and when we receive the commission. I hope our accountant can source someone that can give a definitive answer.

http://fspbusiness.co.za/articles/vat/heres-how-to-treat-vat-if-youre-a-broker-3878.html

[Andromeda]

Well it would be silly to set the date of income when the policies were sold because "as and when" means that when a client cancels you don't get the the rest of the money. Therefore on our side it is accounted for on a monthly basis as it comes in. But Sanlam sees it as money "already paid". I'm not sure what to do about it though, how do you convince Sanlam otherwise?

Yes I agree. Are you able to determine when is the commission accounted for as income in your hands, for income tax purposes?

[Justloadit]

Pretty sure VAT is calculated. As I said it's more the timing of the sale and when we receive the commission. I hope our accountant can source someone that can give a definitive answer.

http://fspbusiness.co.za/articles/va...oker-3878.html

I suggest you visit a consultant in the SARS office.
Ultimately they are the ones who will judge whether you have done it correctly.

[ktersius]

Yes I agree. Are you able to determine when is the commission accounted for as income in your hands, for income tax purposes?

Hmm not sure, according to our accountant when we receive it.

[Andromeda]

OK, I tend to agree. Then for VAT purposes the same would apply, in my opinion. By that I mean that the date of supply would revert to the date when payment is received.

I have tried to find a practice note or authoritative opinion, but no luck. I guess you should rely on your accountant because he will, I am sure, confirm his opinion with SARS.

[EAB]

The commission is vatable. Please read section 7.6 of the VAT guide (VAT404).

As stated the issue is the timing of the supply. For this you should look at your contract. If they claim that they pay no VAT because the sale was concluded before the VAT registration I would add Sanlam as a debtor when the sale is done and then offset the payments against the debtor. You need to declare income at the earliest date where the amounts was paid or accrued. Thus the income accrued to you when the sale is made. I am not sure what the commission structure is, but you should declare the full income when the deal is signed.

Only commission paid to an employee is exempt from VAT. In this this case the firm acts independently to sell the product, thus not under the control and supervision of Sanlam and is therefore not a Sanlam employee for the purpose of the commission payments

[Justloadit]

The only reference I can find is

6.6 FINANCIAL SERVICES
Some examples of financial services which will normally be exempt are

– premiums payable on long term insurance policies
– for example, life policies, sinking fund policies or disability policies; and the buying or selling of derivatives – for example, options, futures and interest-rate swaps.

From 1 October 1996 all fees, commissions, merchant’s discount and similar fee-based charges relating to financial services, became subject to VAT.