Practical VAT Handbook - Digital version

Practical VAT Handbook - Digital version
The Practical Vat Loose Leaf reveals how you can get your Vat refund quicker and avoid expensive Vat Consultant fees. You'll get top tips on how to prevent Vat penalties and benefit from lesser-known tips and secrets so that you get every Vat refund that's owed to you.

Full price: R2 342.70 Inc VAT and delivery

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Errors in Vat invoices could cost you thousands!

Practical Vat Loose Leaf Service

In this issue:

Are there any inaccuracies in your tax invoices? You may be liable for penalties, interest and even prosecution!

What keeps 93% of accountants awake at night?

Vat and vehicles

Do your tax invoices pass the 5 point check

2 easy steps to determine whether or not to charge Vat for a supply or service

What should you do if SARS comes knocking at your door?

Are these activities subject to Vat?

Claim back the input credit on your monthly short-term insurance premium

8 Reasons why you should order the Practical Vat Loose Leaf

How to avoid penalties for mistakes in Vat declarations

Common Vat questions answered

What our readers have to say

Quick Vat tips

What is included in your Vat Loose Leaf Package

Get your free copy of 13 Steps to a Successful Vat Review when you order the Practical Vat Loose Leaf

Are there any inaccuracies in your Vat invoices? You may be charged a very high penalty!

The truth is brutal! Even if it wasn't you who made the mistake, it may be you who will bear the consequences. If SARS has found inaccuracies, you will be assessed, held liable to penalties and interest and possibly even additional tax! You may even be prosecuted! To be continued here

Tip: Think Vat doesn’t apply to your payroll? You’re wrong! Avoid this common error and keep SARS away from your door at audit time

A common mistake picked up by SARS auditors at on-site audits is that employers fail to pay over Vat on company car fringe benefits. This is one of the first areas the audit team will lock onto when they audit you, so make sure you’re paying your output tax on company cars!

Tip: Claim back the input tax credit on your monthly short-term insurance premium

Do you pay a monthly short-term insurance premium, for example to insure your premises or stock against theft, damage or fire? This is a common business expense and forms part of the cost of running your business... so it’s reclaimable.

Remember to claim your input tax credit on these monthly premiums, BUT if you ever get paid out on your policy, bear in mind that because you’ve claimed an input tax credit on your premiums, you will have toaccount to SARS for output tax on the payout.

Are there any inaccuracies in your tax invoices? You could be liable for penalties, interest and even prosecution!

Are you sure that the tax invoices you receive are issued properly? Are all the SARS requirements on the tax invoice? Have you ever thought about it?

What if something is omitted from a tax invoice on which you've already claimed input tax?

Anyone who has ever experienced a SARS Vat audit will tell you the first thing the auditors check are your tax invoices!

Do you know what to pay particular attention to? Even if it wasn't necessarily you who made the mistake, you could be held liable. If SARS auditors find errors, you could be assessed and liable for penalties and interest. You may even be prosecuted.

Errors in Vat invoices could cost you a fortune or even result in your company going bankrupt. It’s too late to have doubts when the SARS auditors visit your office.

What errors must not be made? If you are not sure, check in the Practical Vat Loose Leaf immediately! Order it now and if you're not happy, simply return it within 30 days for a full refund.

Tip: Don’t underestimate the importance of retaining all your tax invoices.

Your tax invoice is the equivalent of the IRP5 for your income tax – if you want to claim an input tax credit, you need a tax invoice. Furthermore, you must keep your records for five years!

What keeps 93% of South African accountants awake at night?

Yes! Invoices! Do these 5 situations concern you too?

1. You are issuing an invoice. You must pay Vat but you’re not sure whether or not your client is going to pay the invoice… Do you have to pay the Vat with your own money? Maybe you would like to find out how to avoid paying Vat for invoices until they’ve been paid by your clients and how to comply with the Vat regulations at the same time?

2. Your client says the invoice he received from you has errors, so he’s not going to pay it until you have issued a correct invoice. Do you know how to argue in order to persuade him that he is not right?

3. The tax office called one of your invoices into question while auditing your client. What will you do when the tax office approaches you – as an issuer – and tries to make you responsible for that?

4. It turns out that your client has not declared Vat properly. Or even worse – he/she turns out to be unreliable: it’s a fictitious company, a tax cheater or simply a mail-box company. Can you deduct Vat from this invoice? How do you handle this if SARS comes calling?

5. An invoice has become a bone of contention; non-uniform regulations are the basic reason for this. Are you sure that your interpretation of the regulations is correct?

Vat and vehicles – Check the details before you get into trouble!

If you run a business and have to use a car, you should know how to declare Vat. It’s not easy though…

Your problems will begin as soon as you buy the car. You have to be 100% sure what you can and can’t deduct.

Vat law clearly disallows an input tax deduction on what it terms a “motor car”, but will allow a deduction on single cab vehicles, delivery vehicles, and some others.

Do you know whether the vehicle you have bought is allowable as a deduction? What else do you have to know? – Much more as there are many traps. Can you claim input tax on a car you rent while out of town on business?

What about repairs and insurance? Are you aware that there are many more unclear situations? Please look at thePractical Vat Loose Leaf before you get into trouble!

Checklist: Common administrative errors vendors make when dealing with Vat.

Check you have fulfilled your Vat obligations in these areas – before SARS catches you out

Fringe benefits: Have you paid the tax on your company cars?
Short term insurance payments
Sundry sales and journal entries
Prohibited input tax deductions, e.g. for entertainment expenses or the hire of passenger motor vehicles
Documentation – is it all correct and do you have everything you need to support your claims?
Are you claiming all the Vat inputs on your debit order payments?
Bad debts
Cancellation of Vat registration – this can give rise to an output tax liability on the remaining stock or assets
Leases and rentals – the time of supply is often wrong
Quotes – are you issuing Vat inclusive quotes?
Petty cash
Bank charges
Subsistence expenses

The Practical Vat Loose Leaf will give you all the information you need to ensure you meet all your Vat obligations.

3 Quick Tips

Tip: Did you know?

That domestic air tickets are subject to Vat? If you are a registered vendor and travel on company business within SA, you can claim back the 14% Vat on your air ticket! However, international air travel, and passenger transport by road and rail don’t attract Vat, and so you can’t claim it back. Remember the Golden Rule: You can’t claim it unless you’re charged it.

Tip: Claim back Vat on your banking charges

Although financial services such as transactions by cheque payment and interest on credit loans are exempt from Vat, the service fee on your bank accounts IS Vatable, and you can claim back the Vat you pay on these amounts. South African bank charges are very high and this is one way to contribute to your overall cashflow and get something back!

Tip: A little known office expense you can claim Vat on

Do you purchase flower arrangements for your reception area? Ever send get well flowers to a sick employee? You can claim back the input tax on these everyday office expenses.

Do your VAT invoices pass the 5 point check?

Checklist: Vat invoices

Make sure your Vat invoices contain all the following items to ensure trouble-free claims:

The words “Tax invoice” in a prominent place

The name, address and Vat registration number of the supplier

The name, address and Vat registration number of the recipient

An individual serialised number and the date the invoice was issued

A full and proper description of the goods or services supplied

Make sure you have complete and valid tax invoices or you will be making it very easy for SARS to meet its budget targets.

Two easy steps to determine whether or not to charge Vat for a supply or service

One of the most common issues that confuses people is whether or not to charge Vat for a supply or service you render to another person or business. Use this failsafe rule to solve your question in two EASY steps!

Step #1: While the new law is that you must record the name and Vat number of your client on your tax invoices, to determine whether to charge Vat or not, the Vat status of the vendor/seller/supplier counts, so always look at the Vat status of the vendor first – if he’s registered for Vat, it’s a taxable supply and Vat must be levied.

Step #2Ask yourself, is the supply an exempt supply? The list of exempt supplies is very limited:

Passenger service by rail or road
Financial services
Supply by a charitable organisation of any donated goods
Rentals on residential property
The sale or rental of land outside SA
Shareblock and body corporate levies – but not home owners’ associations
Educational services
Union membership fees
Service of caring for children by a crèche or an after-school care centre (after-care)


Hr Holroyd signs a 12 month lease to rent a house to live in. No Vat is charged on the monthly rental as rental of residential property is an exempt supply.

Remember: If your business is only rendering exempt supplies, you may not register for Vat!

Best of all, you can start your subscription now and if you're not happy, simply return it within 30 days and get a full refund!

Small error, serious consequences!
How to avoid penalties for errors in Vat declarations

It’s easy to assume that tax offences only happen to cheaters. But minor errors, or even negligence, may result in you defending yourself against serious charges from the tax office.

  • What can you do to reduce a penalty if you’re not in a position to avoid
  • What is ADR and how can you use it?
  • Is it worth admitting guilt voluntarily? What do you risk in this case and what can you win? What are the advantages and disadvantages of accepting a proposal?

Wouldn’t it be great to find out these and many other answers? You will find them in the Practical Vat Loose Leaf. Find out how to avoid penalties for your errors in Vat declarations. Order your copy of the Practical Vat Loose Leaf today!

What should you do if SARS comes knocking at your door?

Checklist: SARS inspections

Two rules to follow if SARS arranges a Vat inspection:

  1. Co-operate. Don’t be difficult or try to obstruct them in doing their job, or try to hide things you fear they will find.
  2. Be prepared.

a. Determine the period they’re interested in reviewing.
b. Prepare your records.
c. Review your records.
d. Obtain a full audit trail.
e. Reconcile Vat returns and financial statements.

Remember: You too, have rights! Make sure exactly what it is the SARS auditors want to investigate. You don’t have to accept vague answers!

Unsure of when to submit your VAT payments to SARS?
Use our simple, failsafe flowchart to see where you fit in:
Category A or B
SARS will register you as a Category A or Category B vendor if your turnover in a 12-month period is less than R30 million. We’ll deal with these categories together, as their obligations and time frames are similar. Account for your input tax and output tax, on one Vat return every two months. You’ll be showing output and input tax for two months on one return. These will be alternating months depending on whether you’re category A or category B.

Category C
If your total turnover exceeds R30 million in a 12-month period, or is expected to do so, SARS will class you as a Category C vendor. You’ll need to submit monthly Vat returns.

Category D
This category only covers farmers, farming enterprises and associations-not-for-gain involved in farming activities.

You can also apply to SARS in writing to be classified as a Category D Vat vendor if your business is based on agricultural, pastoral or other farming activities, and its total turnover in a 12-month period doesn’t exceed (and
isn’t likely to exceed) R1.5 million.

Category E
You can apply to become a Category E vendor and submit annual Vat returns if your company or trust fund
meets the below requirements set out by SARS

How to get your Vat documentation right – first time, every time

Did you know...that in the vast majority of cases SARS has issues NOT with your interpretation of the Act, or with fancy avoidance schemes, or even with complicated transactions, but with your documentation. This is where the most disputes, investigations and all-out battles with the assessors arise – and the crazy thing is, it’s all so avoidable. You must get your documentation right, first time, every time – we’ll show you how with practical tips and explanations, checklists and actual examples of invoices and returns.

Are these activities subject to VAT?

Determining exactly what activities are subject to Vat and those that are not is challenging for the taxpayer.

Check if you know the VAT application of the supplies below:

ActivitySubject to VatIs not subject to Vat
a) LotteryYes, VAT included in the price
b) Tourist ServicesYes, where the tourist enjoys the services in SA
c)Selling copyright for a building projectYes, sale of intellectual property

Common questions about Vat, answered by our Vat experts

Question: Can I request an electronic invoice?

Answer: SARS says YES – provided that it is equipped with 128 bit security, i.e. the person on the other side must not be able to tamper with or change the invoice in any way.

Question: What happens if I lose an invoice?

Answer: This is a problem – you need the invoice to claim back your input tax and SARS will reject your claim out of hand if you don’t have it. You must request the other party to give you another invoice. They must give you an electronic copy, or a stamped certified copy of the original.

Question: Can I claim input tax on office expenses such as staff tea and coffee?

Answer: Sorry – but no. These expenses fall under entertainment expenses and are specifically disallowed by the Act.

Question: Can I claim back the Vat on expenses incurred on a business trip?

Answer: Yes, you can, and this is another handy way of maximising your cashflow. Just bear the following pointers in mind:
  • You can claim back the Vat on the employee’s domestic air travel – but not on overseas travel, as Vat is zero-rated on overseas tickets.
  • You can claim back the Vat on the employee’s accommodation and meals, BUT he must be away for at least one night.
  • What about car rentals? You CAN claim back the Vat on the hire of a rental vehicle, as well as the insurance portion of the rental fee, but ONLY if it’s a single cab truck or vehicle. If you’ve hired a passenger vehicle or double cab for your employee, this claim is specifically disallowed.

You can rely on the information contained in the Practical Vat Loose Leaf!

Our advisers are top experts in the area of Vat.

They’re first-class tax advisers, employees of tax offices and affiliated to the biggest consulting companies. They offer a wealth of practical hands-on experience. And to guarantee that we provide you with outstanding service, we make sure that each piece of information is verified by an independent expert before being published – so you are 100% guaranteed of the quality of information printed in your Loose Leaf.

About our experts:

Peter Franck, Editor-in-chief of the Practical Vat Loose Leaf. Peter is tax consultant in the private sector and a Vat consultant to the East African office of the International Monetary Fund (IMF). Peter was integrally involved in the introduction of Vat in South Africa. He worked at SARS for many years and was also a regular speaker at BPS Seminars.

Dee Bezuidenhout, Ex Vat manager at BDO, ex-SARS law administrator and interpreter and auditor with 21 years SARS experience behind her. Dee has drafted several Vat guides for SARS and assisted several other countries with the implementation and drafting of their Vat laws.

Kallie van der Merwe is an advocate and former SARS law administration group manager responsible for indirect taxes

Christo Augustyn is a manager Indirect Tax department at KPMG. Christo holds a National Diploma in Internal Audit.

By ordering your copy of Practical Vat Loose Leaf Service today:

You’ll learn how to meet all your of Vat obligations with minimum effort
The Loose Leaf contains practical advice in a step-by-step format to help avoid penalties from SARS and complete/pay your tax in the most efficient way.

You can count on the advice in the Loose Leaf, as it’s 100% legal
All information is referenced to the law and checked by external Vat experts/consultants.

Who should subscribe to the Practical Vat Loose Leaf?

Accountants, bookkeepers, financial managers and directors, owners of companies, and anyone who deals with Vat issues.

Sign up to the complete Practical Vat Loose Leaf Subscription Service!

Including 8 legal Vat updates, the Vat handbook, the special report: 13 Steps to a successful Vat Review!, access to the 24/7 expert Vat advice helpdesk, five bonus Vat saving reports and the daily Tax Bulletin newsletter.

Not many people know that when input tax exceeds output tax, they can claim a refund from SARS. Well, you don’t have to be one of those people! There are six secrets you can use to get SARS to pay you what’s rightfully yours... every single time.

These secrets cover tax invoices, input tax, notional input tax, denied deductions, claims, and apportionment.

Your Practical Vat Handbook includes:

 Over 500 pages of step-by-step advice, tips, tools and checklists to handle all of your Vat problems in a 100% correctly.

 143 Practical examples and checklists that show you what elements you should consider for your Vat to be perfect;

 23 Red flags you need to watch out for and the penalties you'll face if you don’t respect them;

 14 sample templates at your disposal, ready to be filled in, customised and printed.

The Practical Vat Loose Leaf Subscription Service is a full service Vat consultancy you'll use every day!

And that’s just the start

Get 5 Bonus Gifts and Services
(Worth R4 450 – Yours Absolutely free)

You'll also receive FIVE Bonus Gifts and Services to save you money and make your job even easier.

These include:

Bonus Service #1: 8 Vat legal updates
Vat changes and regulations are gazetted throughout the year. The updating subscription guarantees that your handbook is always 100% up-to-date. Simply remove the outdated pages and replace them with the new ones. It’s always up-to-date and accurate!(valued at R1 600)

Bonus Report #2: 13 Steps to a successful Vat Review
This book covers Vat reviews in detail, highlighting the key Vat risk areas and potential errors in your Vat management system - before SARS discovers them. You’ll get the low-down on how to fix the errors too. (valued at R199)

Bonus Service #3: Free expert advice to solve your Vat problems
You'll have access to a personalised Vat Helpdesk service where a team of Vat experts are available 24/7 to answer your specific questions. Simply log onto the and ask your specific Vat question using the “Vat Helpdesk” button. And Voila! One of the experts will assist you with a personalised answer. (valued at R1 000)

Bonus Service #4: Members only website access
You don’t need to wait even one day to start implementing the expert Vat strategies from the Practical Vat Loose leaf service, You'll immediately have access to the Members-only website. You'll be emailed your unique username and password today. (valued at 1 200)

Bonus Service #5: Daily tax, Vat and accounting solutions straight to your inbox
Every day you'll get the Tax Bulletin email newsletter. It’s packed with useful tips, reminders and Vat advice to solve your daily Vat problems. (valued at R450)

But that’s not all you'll get in your package…

Get 3 Additional Bonus Gifts
(Valued at R397 – Yours absolutely free)

To welcome you as the newest subscriber, you'll get instant Vat savings, with these FREE three bonus reports:

Your Vat201 lifeline: How to prepare once SARS selects you for an audit (valued at R99)
Vat Registration: 11 Tips for a stress-free registration process (valued at R199)
3 Ways to avoid a 200% SARS penalty on fixed asset rentals (valued at R99)

A Total Value of R5 540
But you will receive everything at a massive
discount when you sign up now to the Practical Vat Loose Leaf Service

Despite the fact that the Practical Vat Loose Leaf Service is developed by Vat experts and will save you thousands in Vat and penalties, you don’t have to pay a high-end price.

The full subscription is only R5 540a year…. which is a pittance, compared to the savings you'll make within a few months.

And here’s the great news!

Today, you can secure your full subscription for as little as R1 995 excl Vat - a R3 545 saving.

And, you can still decide if the subscription is right for you because…

EVERYTHING is 100% Satisfaction Guaranteed

If at any time during the next 30 days, for any reason whatsoever, you decide the Practical Vat Loose Leaf service isn’t for you, simply call or email us.

You will be refunded every cent of the subscription price.

It doesn’t get any simpler than that.

No pressure – no gimmicks – no strings attached.

Important notice: Your subscription to the Practical Vat Loose leaf service comes with a convenient automatic renewal. This means no chance of interrupted service. Ninety days before the end of your subscription, Fleet Street Publications will notify you that your subscriptions are ending and will advise you of the terms and renewal rates then in effect. Unless you cancel, your subscriptions will renew automatically and we will send you an invoice for payment. If you want to cancel, just respond to the notice within 30 days, and we won’t renew you. You can also contact our Customer Care department on 0861 114 365.

A Total Value of R5 540!
But you Receive Everything at a Massive Discount
and Only Pay R1 995

The 500 page Practical Vat handbook(valued at R695)
Service #1: 12-month legal update subscription(valued at R1 600)
Report #2: 13 Steps to a successful Vat review(valued at R199)
Service #3: Free expert advice to solve your tax problems(valued at R1 000)
Service #4: Members only website access(valued at R1 200)
Service #5: Daily tax, Vat and accounting solutions straight to your inbox(valued at R450)
Bonus Gift 1: How to prepare once SARS selects you for an audit(valued at R99)
Bonus Gift 2: 11 Tips for a stress-free Vat registration process(valued at R199)
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Total package worth R5 540. You only pay R1 995 (excl vat and delivery). Save R3 540.

“I have used your handbook on a number of occasions and have found it most useful, especially with regards to what I can claim and what I cannot claim.”
-D Nash 

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