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Thread: Input tax

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    Input tax

    If a company was registered for VAT voluntarily.

    Are they aloud to claim the input VAT on capital assets bought before their VAT registration?

    I read an article that it was allowed, but it was an article in 2013/2012. No sure if it is applicable, anddo not see anything like that in the law.
    On the one side I feel that it should be since, when the assets is sold their will be VAT output tax, but do not want to claim something that is not allowed.

    If anyone has done that before, can you please tell me.

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    In terms of section 17 of the VAT Act, a vendor is entitled to deduct input tax incurred by him if the goods or services have been acquired wholly or partly for the purpose of consumption, use or supply in the course of making taxable supplies.

    If the vendor was in possession of capital goods (such as equipment, machinery or furniture, commercial vehicles etc.) at the time it became registered for VAT, the VAT on such capital goods may be claimed in terms of section 18(4) of the VAT Act based on the lesser of the cost or market value of the goods at that time, on the basis that the application or use of the goods have changed from being used for purposes other than making taxable supplies to that of making taxable supplies. The change in use adjustment does not require a tax invoice reflecting the VAT number. However, you will be required to substantiate the amount on which the VAT is claimed.

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    Dave A (12-May-17)

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    Thank you!!!


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    Thanks for sharing

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