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Thread: vat(value added tax) rounding

  1. #11
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    Quote Originally Posted by Justloadit View Post
    Yes immaterial, but the figures do not balance in trial balances and balance sheets with out an adjustment entry, and if it is owing to SARS you can not get a clearance certificate.
    In this example it may be a small amount, how ever take this example over a million items, then it may become significant to the point that it can skew a trial balance
    If you have R 999,999.51 in the bank, you are not a millionaire
    Not an accountant, are you?

    Not sure how you got from VAT processing to balance sheet being out of balance to owing to SARS?

  2. #12
    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by SoTrue View Post
    Not an accountant, are you?

    Not sure how you got from VAT processing to balance sheet being out of balance to owing to SARS?
    No I am not an accountant, you said that the error was immaterial, the question is to who?

    Every business who is VAT registered must present a VAT report to SARS. All VAT figures must balance at year end when doing a balance sheet, which an auditor then has to sign off. If the figures you present toSARS, and the audited figures donot match, this raises a flag, and requires scrutiny to identify the reason. So small errors are material to a business.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar pumping, Solar Geyser & Solar Security lighting solutions - www.microsolve.co.za

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    Quote Originally Posted by Justloadit View Post
    No I am not an accountant, you said that the error was immaterial, the question is to who?

    Every business who is VAT registered must present a VAT report to SARS. All VAT figures must balance at year end when doing a balance sheet, which an auditor then has to sign off. If the figures you present toSARS, and the audited figures donot match, this raises a flag, and requires scrutiny to identify the reason. So small errors are material to a business.
    You don't understand, so I can't reason with you.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by SoTrue View Post
    49c is still totally immaterial.
    You'd think. I've had big companies give me grief on smaller VAT calculation differences on a single invoice though.

    And it can really add up across a year under the right (or should that be "wrong") circumstances. Imagine the Justloadit rounding example where that is your only product!

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    Platinum Member SilverNodashi's Avatar
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    So, would it be better / safer to use all figures with 4 digits, instead of rounding off to the nearest 2 digits?

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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by SilverNodashi View Post
    So, would it be better / safer to use all figures with 4 digits, instead of rounding off to the nearest 2 digits?
    Depends on your accounting package.
    SARS uses your total figure of invoice, VAT included to calculate the VAT owe/ed. They take your Total amount X 14 / 114 where 14 is the current VAT of 14%, and the 114 is 100% plus 14%. The answer is the VAT that SARS uses.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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    Platinum Member SilverNodashi's Avatar
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    Quote Originally Posted by Justloadit View Post
    Depends on your accounting package.
    SARS uses your total figure of invoice, VAT included to calculate the VAT owe/ed. They take your Total amount X 14 / 114 where 14 is the current VAT of 14%, and the 114 is 100% plus 14%. The answer is the VAT that SARS uses.
    Yes, fair enough. But I see a lot of supplier's have 4 digits on their invoices, making capturing quite painful. So it seems it's easier / better to also use 4 digits, instead of adding a "rounding" figure of a couple cents to balance the invoice?

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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by SilverNodashi View Post
    Yes, fair enough. But I see a lot of supplier's have 4 digits on their invoices, making capturing quite painful. So it seems it's easier / better to also use 4 digits, instead of adding a "rounding" figure of a couple cents to balance the invoice?
    I have seen with a number of suppliers, that they have a price base for 100 or 1000 as the unit costing, eg R2,451.00 per 1000. This may be another way round this issue, but it may depend on your accounting package.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar pumping, Solar Geyser & Solar Security lighting solutions - www.microsolve.co.za

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