Claiming Input VAT on entertainment

[CandiAsh]

Hi,

I am trying to figure out how to capture VAT correctly. Please can someone help!

If you are charged VAT by a restaurant for a company function. Are you able to capture the VAT and claim it?
As far as I know this would fall under "Entertainment expense" which you are not able to claim VAT on? Would this only be the case if you were not charged VAT by the supplier?

When is VAT not claimable?

I am really confused by this!

If someone can help, I would really appreciate it!

[Mike C]

Hi CandiAsh. Just because you are charged VAT does not mean that you are permitted to claim it back. Entertainment expenses are not claimable. The restaurant has to claim VAT by law for the supply of their services and goods.

Basically, you pay VAT on the items or services you buy from other business.

You, then, charge VAT on the items or services you sell to other businesses and customers(if you are VAT registered).

The idea is the VAT you pay and the VAT you charge roughly equals out - if it doesn't, you level the balance with SARS via your VAT return.

In your restaurant scenario, you are the end user of the food. You are not selling it on, so you cannot claim VAT back.

You can claim VAT on items used to run your business. Repairs and maintenance, for example.

There are also certain rules for Tax Invoices. If your supplier does not meet those rules, you cannot claim VAT back on those items.

A few other things that you cannot claim VAT on are: (this is just a quick list of regular items and does not cover everything)
Petrol/Diesel
Loans
Hire Purchase Items
Wages
Life Insurance
Interest

It can be a little confusing at first ... and every now and then you will encounter something that will make you stop and have to ask, but you will get the knack of it as you proceed.

[CandiAsh]

Hi Mike.

Thank you for your feedback.

So would I be correct in saying that if I receive a slip from a restaurant (which is for staff entertainment), I would capture it as an entertainment expense with the total amount incl VAT and not claim the VAT on this?

[CandiAsh]

Or would I capture the VAT as exempt?

[Andromeda]

So would I be correct in saying that if I receive a slip from a restaurant (which is for staff entertainment), I would capture it as an entertainment expense with the total amount incl VAT and not claim the VAT on this?

No. The vat inclusive amount is the amount of the expense, regardless of whether the actual items are cliamable.

[Neville Bailey]

With regards to VAT on entertainment, although one cannot claim the VAT, apparently one can claim the VAT on entertainment for the portion of the cost relating to customers/clients.

For example, if you take clients out to dinner, you can claim the VAT on their portion of the meal, but not on your portion of the meal.

Is that correct?

[Mike C]

With regards to VAT on entertainment, although one cannot claim the VAT, apparently one can claim the VAT on entertainment for the portion of the cost relating to customers/clients.

For example, if you take clients out to dinner, you can claim the VAT on their portion of the meal, but not on your portion of the meal.

Is that correct?

I have never heard of that before. Anyone else?

[Mike C]

Hi Mike.

So would I be correct in saying that if I receive a slip from a restaurant (which is for staff entertainment), I would capture it as an entertainment expense with the total amount incl VAT and not claim the VAT on this?

That is correct.

[Justloadit]

Another part in which you are able to claim VAT on, is if you are boarding and lodging more than 100Km from your base, and you are busy with supplying a customer with a service, or goods or training or what ever may be business related or in the process of obtaining future business.

[CandiAsh]

Thank you everyone! I really appreciate the help!

[bammer]

For more information in this regard, note the attached VAT 411: Guide for Entertainment, Accommodation and Catering