[Question] Vat on vehicles

[wendymend1]

Hi there,
I have a question that I need some advice on.
If a company (CC) purchases a caravan for the private use of it's owner. Can the company process the VAT thorugh its books on this caravan?

Thanks
Wendy

[Dave A]

How is the caravan going to be applied in the generation of output VAT?

[sgafc]

Hi there,
I have a question that I need some advice on.
If a company (CC) purchases a caravan for the private use of it's owner. Can the company process the VAT thorugh its books on this caravan?

Thanks
Wendy

Although you pay Vat on the purchase, you CANNOT claim the Vat. No Vat is allowed on vehicles for private use. In fact you cannot even claim vat on passenger vehicles for BUSINESS USE. Only Trucks and Bakkies. Four door bakkies are also NOT Vat deductible(passenger vehicle). You mentioned private use, so SARS would not even look at your case.

Maybe, just maybe.. if the caravan can be used solely for business use(office for instance), you can claim it, on your books, as a business asset/expense.

[Marq]

A caravan looks like a portable office to me. How about a site office for your new operation in the berg. The new one where you are developing plans for schemes on tax avoidance. Not evasion, mind you just avoidance and at the same time you have to develop a plan for a plan to make a plan for your business in the berg. Just like they do in the goberment.

[wendymend1]

Thanks guys for all the advice on my question.

As the carvan isn't going to be used for business purposes.
Would it be correct to say that I can't show any VAT (input or output) in the books?
The caravan would be added as an asset but with no VAT?

Thanks again.

[sgafc]

You will disclose it inclusive of Vat. If the caravan was R50 000 plus R7000 vat for instance. The cost you bring the asset in, would be R57 000.00.

Good Luck

[sunny]

and how does it work for car rentals? I want to buy 10 new cars for my car rental business - can I claim the VAT? Thanx!

[geraldenek]

and how does it work for car rentals? I want to buy 10 new cars for my car rental business - can I claim the VAT? Thanx!

Hi, yes you can claim the vat on the vehicles and it will still be classified as an asset in the financials.

[Yvonne]

As the caravan is for private use, it should not appear in your books at all, and if paid for through company assets ie. business funds, must appear as "drawings" for owners or directors, and site/paye tax paid in your personal capacity as if the figure is an earnings.

You would have to have clear evidence that the caravan was essential to conducting your business before it could be included as a company asset.
Might be different for a CC?

Either way, it is better for you in your personal capacity to be the "owner" of the asset.

Yes, without question, don't pay tax on anything that is legally deductible, but there is a fine line between possible tax avoidance and tax evasion!

Just a small bit of advice to anyone considering owning their own business:

If anyone has the idea that one of the advantages is the ability to avoid any taxes, in almost every case, it will be evasion of taxation, rather than avoidance, right now there are very few instances of benefits to owning your own business from a taxation point of view! Yes! I know - high finances perhaps, but for the "ordinary" man in the street small business, it is very difficult to find benefits which are worth the chance of having the SARS disagree with your deduction!
Just study the taxation on "use of a company vehicle" etc.

Yvonne

[AletR]

vat on vehicles

Hi there,

Understanding the vat claiming on vehicles, vat claims are not allowed on motor vehicles when purchased by a vat vendor.

However, when vehicles is a main source of income, i.e. the armed response industry. Sure we do not claim the vat on the purchase of the vehicle, however are you allowed to claim the vat on the running costs of the motor vehicle: maintenance, insurance, repairs, etc.

Best regards
A

[Dave A]

Understanding the vat claiming on vehicles, vat claims are not allowed on motor vehicles when purchased by a vat vendor.

OK - so I'm doing it wrong then

Please refer to post 3 and then confirm your position on this.

[flaker]

vat repayment

Hi, yes you can claim the vat on the vehicles and it will still be classified as an asset in the financials.

u have to remember,however,that once you sell these cars that you've claimed vat on,you now pay back the vat on the selling price.

[eitai2001]

Hi

You are not allowed to claim the VAT on the actual motor vehicle as definited in S1 of the act.

You are allowed to claim VAT on the maintenance, etc as this is not excluded ... only the actual motor vehicle is specifically excluded. The only provisio is that this maintenance, etc must be for business purposes otherwise you will need to apportion the business and private use.

If you sell the vehicle, then you will have to charge output vat, but a change of use adjustment comes into play and you will be allowed to claim input vat on the purchase price, unless it is sold to a connected person in which case you pay input vat on the lower of the purchase price or market value.

The exception to the rule of not claiming input VAT on the vehicle is if renting a car is your main source of income or you buy and sell cars, in these circumstances you can claim VAT.

Regards

Itai

[AletR]

Hi

You are not allowed to claim the VAT on the actual motor vehicle as definited in S1 of the act.

You are allowed to claim VAT on the maintenance, etc as this is not excluded ... only the actual motor vehicle is specifically excluded. The only provisio is that this maintenance, etc must be for business purposes otherwise you will need to apportion the business and private use.

If you sell the vehicle, then you will have to charge output vat, but a change of use adjustment comes into play and you will be allowed to claim input vat on the purchase price, unless it is sold to a connected person in which case you pay input vat on the lower of the purchase price or market value.

The exception to the rule of not claiming input VAT on the vehicle is if renting a car is your main source of income or you buy and sell cars, in these circumstances you can claim VAT.

Regards

Itai

Hi Itai

Thanks for the explanation.
That means even though we buy PASSENGER vehicles as our armed response vwhicles, we ARE allowed to claim the vat on the MAINTENANCE and RUNNING COSTS, but the Vat on the Purchase price are disallowed?

DAVE A, do you agree with this?

Best regards
Alet

[Dave A]

DAVE A, do you agree with this?

Spot on