Results 1 to 6 of 6

Thread: VAT Registration date after date of commencement of instalment sale agreement

  1. #1
    Silver Member
    Join Date
    Apr 2011
    Location
    Jhb
    Posts
    281
    Thanks
    105
    Thanked 14 Times in 10 Posts

    VAT Registration date after date of commencement of instalment sale agreement

    Hi all,

    What happens if an entity is registered for VAT on say 1 February 2012, but has a instalment sale agreement in place that commenced before that date (say January 2012).

    For illustration purposes, let me use some figures:

    On 1 January 2012, instalment sale agreement for stock purchase of R1,000,000 (excl VAT), R1,140,000 (incl VAT) commenced. The agreement is signed on that date and a tax invoice for this purchase is issued by the supplier. The date of the invoice is 1 January 2012. The supplier is registered for VAT, but the purchaser is only registered for VAT on 1 February 2012.

    Per the instalment sale agreement, the outstanding amount is payable over 6 months. The first instalment of R190k (R167k excl VAT) was paid on 1 January 2012. The purchaser allocated the full amount of R190k to stock, as VAT input can not be claimed. The seller accounts for R23k Output VAT and R167k is allocated to turnover.

    The entries on 1 January 2012 are as follows (purchaser):

    Dr Stock R1,140,000 (full value incl VAT as not yet registered for VAT)
    Cr Supplier R1,140,000

    Dr Supplier R190,000
    Cr Bank R190,000

    The second instalment of R190k (R167k excl VAT) was paid on 1 February 2012. Can the purchaser allocate R167k to stock and claim back R23k Input VAT on this transaction? He is registered for VAT from 1 February 2012, but the invoice date is before that date?

    Please advise...

    Thank you!

  2. #2
    Silver Member geraldenek's Avatar
    Join Date
    Jul 2008
    Location
    Somerset West
    Posts
    229
    Thanks
    19
    Thanked 112 Times in 80 Posts
    no, you won't be able to claim the vat on the transaction as the contract date was 1 Jan 2012 - the business is registered on the invoice basis - not on the payment basis so regardless of when he pays the amount he won't be able to claim the vat
    Geraldene Kapp
    Professional Tax Help
    www.mytaxhelp.co.za

  3. Thanks given for this post:

    J7J (20-Apr-12)

  4. #3
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    Quote Originally Posted by J7J View Post

    The supplier is registered for VAT, but the purchaser is only registered for VAT on 1 February 2012.
    Why was this?
    Is the purchaser incorporated? Is so, when?

  5. #4
    Silver Member
    Join Date
    Apr 2011
    Location
    Jhb
    Posts
    281
    Thanks
    105
    Thanked 14 Times in 10 Posts
    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Why was this?
    Is the purchaser incorporated? Is so, when?
    The purchaser is operating in a company (company registered in 2011). We did the VAT Reg application and the effective of registration on the VAT 103 is 1 February 2012.

  6. #5
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    1. In terms of Section 18 (4)(b) you can, as a change in use, claim the vat on assets that you use to make taxable supplies, in your hands on registration.
    2. Section 19 allows you to claim VAT on pre-incorporation expenses, provided the company has reimbursed whoever paid for it, in full, and it is incurred within 6 months prior to registration. Note that a loan account entry might well not cut it...

  7. Thank given for this post:

    Dave A (24-Apr-12), J7J (02-May-12)

  8. #6
    Silver Member
    Join Date
    Apr 2011
    Location
    Jhb
    Posts
    281
    Thanks
    105
    Thanked 14 Times in 10 Posts
    Thank you very much for the responses. Really appreciate it.

Similar Threads

  1. Funny Date
    By osbert in forum Accounting Forum
    Replies: 1
    Last Post: 09-Mar-12, 08:09 PM
  2. STC Cycle Start Date
    By daveob in forum Tax Forum
    Replies: 1
    Last Post: 03-Dec-11, 01:02 PM
  3. Need to get date of a trial in 1983
    By Justloadit in forum General Business Forum
    Replies: 0
    Last Post: 23-Jun-11, 01:00 PM
  4. Instalment Sale Agreement
    By BvN in forum Business Finance Forum
    Replies: 1
    Last Post: 13-Aug-10, 12:29 PM
  5. [Question] Instalment Sale Agreement
    By QUINN in forum General Business Forum
    Replies: 13
    Last Post: 12-Jun-09, 08:38 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •