13 Easy Steps to Complete Your Vat Return
Vat return rule #1 : The Vat 201 form is a legally binding document
When you sign the Vat 201 form, you're telling SARS that whatever's on the form is 100% true and accurate. So you'd better make sure it is!
Take these 13 steps to complete your Vat 201 return.
Step #1: Calculate your output tax, based on total sales at the standard rate
Step #2: Calculate your output tax on capital goods sold
Step #3: Transcribe the total zero-rated and exempt sales on the return in columns 2 and 3
Step #4: Transcribe the total amount received for accommodation exceeding 45 days, in column 5. Calculate 60% of this amount, in column 6.
Step #5: Multiply the total by 14%
Step #6: Complete the sums for your output tax
Step #7: Transcribe the amount of Vat paid for capital goods, in column 14
Step #8: Transcribe the total amount of Vat paid for all other goods supplied to you, in column 15
Step #9: Transcribe the total amount of bad debts written off
Step #10: Determine the sum of input tax, based on these figures
Step #11: Deduct the total input from the total output
Step #12: Calculate any penalties and interest you owe SARS
Step #13: Calculate the total amount you owe SARS.
TIP: Check and re-check your calculations. And make sure you're using the right Vat period, the right Vat numbers and the right Vat calculations. Oh, and DON'T use Tippex. SARS won't accept forms with Tippex on them...
Vat return rule #2: If you're not using the NEW Vat201, your return will be rejected
The Vat 201 form has undergone a surgical makeover. It now has new fields that you’ll have to fill in. These include:
• Field 2A: zero-rated supplies of all goods exported from SA
• Field 14A: calculation of input tax — applying to capital goods imported, and for which a valid release is held
• Field 15A: calculation of input tax — applying to non-capital goods imported, and for which a valid release is held.
• Customs Code: Your exporter/ imported code, which will allow SARS to link the information you’ve declared for customs to the info you’ve declared for Vat. This code is compulsory if you complete all these new fields.
Since SARS switched to this new form in June, it expects that you’re going to use it exclusively, to submit your Vat returns. Use the wrong form and your returns will be rejected… and that means Vat fines!
Getting the new form isn’t the hard part. But knowing how to complete it, is. How much do you know about Vat?
Vat refunds – do you know the secret of how to claim what’s owed to you?
Were you supposed to get a Vat refund but you never received it? Has SARS taken ages to refund you?
Any taxpayer will, at some stage in his lifetime, have heard someone say that when you must pay SARS, you must pay at once, but when they must pay you, it takes forever!
Have you experienced the truth in this statement by ever filing a Vat return that results in SARS owing you? If so, you are one of many, many Vat vendors who either have not received their refund, or, who have received it – but only after waiting for ages!
Important: Did you know that SARS must refund you within 21 business days? You didn’t?
Well, the Vat Act says so! In addition, the law also says that if they don’t do so, they must pay you interest on their late payment! Sound too good to be true? Turn to page 10 for the full story!
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 must account to SARS for output tax on the payout.
Don’t be fooled – make sure you get your refund when it’s due to you!
We are experiencing more and more Vat vendors whose Vat refunds are not being refunded to them! Queries to SARS inevitably end up in vague answers – with no help offered!
Vat is a self-assessment system, which means that you must calculate whether you are liable to pay to SARS or receive from SARS. Where you calculate that SARS must pay you back, did you know that by law, SARS is obliged to refund that money to you within 21 business days? That is 21 business days, with or without an audit from them? If they don’t, they must pay you interest!
But, how often does SARS keep to this rule...?
You submit your return, make sure you and all your relevant documents are available in anticipation of that call from SARS...
And then never hear anything about your refund again...
What do you do?
Let me tell you!
You don’t need to forego your refund because you don’t want to “rock the boat”. You can rely on our experts and take advantage of their experience with SARS! Learn how to stand up for your rights! The Practical Vat Loose Leaf will give you that.
It’s not your ordinary guide; it’s a service where you can always find up-to-date information, advice and tips.
Top-class Vat specialists have put it all together for you!
You can have all the answers at your fingertips – just order the Practical Vat Loose Leaf for a 14-day trial. Within this 14-day period you can use it as often as you like at the publisher’s cost. Find out for yourself whether it is worthwhile having on your desk when you need professional help.
You will see just how practical and beneficial this Loose Leaf is.
Editor in Chief
Practical Vat Loose Leaf
PS. When you order your Practical Vat Loose Leaf you will receive your free copy of “How to Make a Taxpayer Happy,” worth R99.
PPS. Place your order within the next two weeks and receive the How to Survive a SARS Audit booklet and CD containing 22 useful checklists. Be empowered to look at your business through the critical eyes of a SARS auditor. Know your rights and prepare your business.
* No complicated legalese
* Step-by-step instructions & check lists
* easy to understand examples to make sure you get every calculation 100% correct.
* You will always be 100% up to date on Vat law.
* It will make your life easier and save your company money.
* Free Q&A service
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 legal requirements on the tax invoice? Have you ever thought about it?
What if something is omitted from a tax invoice you've already claimed input tax on?
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? 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 and use it for a 14-day trial.
Don’t underestimate the importance of retaining all your tax invoices.
Your tax invoice is the equivalent of the IRP 5 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?
We answer all of your Vat questions about invoices in the Practical Vat Loose Leaf.
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 the Practical 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.
What to do when SARS audits your refund – 5 tips to help you!
✓ It’s best for them to come to you. This way you won’t have to photocopy 5 000 invoices, when they ask for them?
✓ Make sure all the documents, books, invoices, etc relating to that specific Vat return are available.
✓ Instruct your staff not to answer any questions – rather tell your staff to direct the SARS auditors to you.
✓ Don’t answer any questions verbally – tell SARS they must raise their issues in writing at the end of their audit and you will respond in writing – this way there is always a record! (Check your 21 days!)
✓ Make sure their queries relate to the tax period in which you have claimed your refund.
Be 100% ready for your SARS audit! When you order your Practical Vat Loose Leaf, we’ll send you the How to Survive a SARS Audit absolutely free!
Arm yourself with the ammunition to survive your SARS audit:
✓ 22 checklists to use in assessing your risk
✓ 13 items SARS will check
✓ 4 expenses SARS will target
✓ 11 questions you’ll be asked
✓ What to do when an assessment is issued
The How to Survive a Tax Audit: Checklists CD will help you know:
✓ Documents you must retain
✓ The risk areas on your balance sheet
✓ How to minimise your payroll risk
✓ The general checks in a Vat audit
✓ What questions to ask when disputing an assessment
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 says you must record the name and Vat number of your client on your tax invoices, to determine whether to charge Vat or not you must know the Vat status of the vendor/ seller/supplier. Always look at the Vat status of the vendor first – if he’s registered for Vat, it’s a taxable supply and you must levy Vat.
Step #2: Ask 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)
Remember: If your business is only rendering exempt supplies, you may not register for Vat!
8 reasons why you should order the Practical Vat Loose Leaf and take advantage of our free 14-day trial period.
1) You will no longer make mistakes when issuing invoices – mistakes that could cost you a lot of money!
Use the Practical Vat Loose Leaf to find out what to do to avoid situations that invalidate your right to deduct the Vat paid from Vat to be paid. You’ll make sure that you have issued invoices in accordance with law. Every topic is discussed in detail and supported by several examples showing you how to cope with even the most difficult Vat declarations.
2) We will keep you informed and 100% up-to-date on Vat law
The Practical Vat Loose Leaf is constantly monitored and updated. You will receive updates on a regular basis when any new Vat amendments happen. You will find the latest information you need to know as a person who is responsible for Vat in your company: discussion of the latest amendments, new indexes and also the issues that have never been discussed before. You can be sure that – thanks to this Loose Leaf – you won’t be surprised by any Vat amendment. All in the most cost-effective and easy way possible!
3) Should any doubts arise you can always ask an expert!
If you subscribe to the Practical Vat Loose Leaf you can always consult our experts. Simply email us your question and we’ll send you an answer within 48 hours.
4) You can rely on the opinions and tips given by our Vat experts
Our authors are top-class Vat experts and have even worked for SARS. Each piece of information is verified by an independent consultant so you can rely 100% on the quality of the advice given.
5) You can consult a Vat expert every day – 24 hours a day
You can make use of Vat expertise every time you need it. It is always at your disposal – simply lying on your desk. Don’t look for a solution yourself or risk making an expensive error, when you can use the Practical Vat Loose Leaf instead. You can read about how experts view a particular problem. And you can turn their know ledge and experience to your benefit as often as you want or need.
6) Keep up to date with the free weekly Tax Bulletin
Every week we will email you the Tax Bulletin. This email newsletter is part of your Loose Leaf and will keep you informed with up-to-date information on any amendments to Vat and Tax regulations that may impact on your work.
7) 14-day trial period
Order your copy of the Practical Vat Loose Leaf for a 14-day trial period and check for yourself how useful it is. After these 14 days, you can continue using it by simply paying the invoice sent with the Loose Leaf. Or, you can return it to us and we’ll forget about the bill.
8) Receive your free booklet…. How to make a taxpayer happy worth R99
No more waiting in queues or making late payments! Here’s how you can save money and get a quicker refund. In this booklet we tell you how to use e-filing to your benefit.
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 it?
- 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.
What should you do if SARS comes knocking at your door?
Checklist: SARS inspections
Two rules to follow if SARS arranges a Vat inspection:
- 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.
- 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!
Input tax on entertainment and travelling costs – what you can and can’t claim
Use these simple tips on what you can or can’t claim input tax on, when it comes to entertainment and travelling:
Travelling – you can claim Vat on:
• Accommodation – where your employee is obliged to stay out of town in the line of his employment duties
• Meals – where they form part of the bill of the accommodation
• Airplane tickets – where it is for domestic travel (Vat is zero rated on foreign travel)
• Insurance on car rental
• Toll fees
Entertainment – you can claim Vat on:
• Cleaning materials
• Flowers for reception area
• Medical bills of employees – where you pay for it
• Promotional gifts – e.g. a T-shirt with your company logo on it
Travelling – you can’t claim Vat on:
• Foreign air tickets
• Car rentals
Entertainment – you can’t claim Vat on:
• Staff refreshments
• Staff canteens – where meals are provided free
• Any equipment for kitchens used for staff refreshments – microwave ovens, fridges, kettles
• Year-end function expenses
• Non-promotional gifts – wine, chocolates
• Personal subscriptions – golf club fees, gym fees, etc.
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.
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, ie 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.
Vat Refunds: SARS must pay you back within 21 business days!
So, you’ve completed your Vat return for a tax period and sent it in to SARS. On this return you’ve calculated that you must receive a refund from SARS – and you wait.
What must SARS do with your refund return?
• They capture it on their system
• The refund return is now screened. SARS asks whether a Vat audit is necessary before a refund is made. If so, the SARS auditor must contact you to proceed with the audit.
What are your further duties?
• Once you give in your refund return, make sure that you and all the relevant documents that pertain to the refund are available for audit. (This is why it is important to ensure that SARS always has your current contact details!)
• Should a SARS auditor contact you, arrange for an appointment for the audit to be carried out.
• Make sure all your other taxes are up to date and you owe nothing to SARS!
• Remember to count your 21 business days yourself to keep an eye on SARS! You start counting from the day you give in your Vat return!
Important: Where you and your documents are available for audit, SARS must complete that audit and refund you within 21 business days! If they don’t, you can insist on interest
If you have the Practical Vat Loose Leaf you can safely cope with calculating Vat
Don’t let your company become a statistic! Make sure you are up-to-date on Vat information.
The Practical Vat Loose Leaf contains a special updating service. Your Loose Leaf will be updated regulary (each update is priced at R1.97 per page with a maximum of a 100 pages).
You will receive current information concerning amendments, clarifications and new interpretation. Also, you’ll learn about any new adjustments, rulings and practice notes – all written in an easy to understand, user friendly language.
The Practical Vat Loose Leaf will help you avoid penalties for incorrect calculations of Vat!
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, Vat manager at BDO, ex-SARS law administrator and interpreter and auditor with 17 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.
Order it and use it free of charge for 14 days!
By ordering your copy of the Practical Vat Loose Leaf today:
- You’ll learn how to meet all your Vat obligations with minimum effort
- All tips, recommendations and information in the Practical Vat Loose Leaf are 100% legal
- Everything is checked by two independent consultants
- In each section, you’ll receive:
– Practical Vat advice in plain English with no legalese
– Step-by-step instructions
– Checklists to make sure you haven’t forgotten anything
– Templates and sample forms to complete all your documentation 100% correctly
– Many, immediately understandable examples
- Your Practical Vat Loose Leaf will always be up to date, with regular Vat updates sent to you.
- Free weekly Tax Bulletin The Tax bulletin will be emailed to you every week. This e-newsletter will keep you up to date on any Vat changes and keep you informed of any deadline dates and important Vat information.
- FREE Gift: How to make a taxpayer happy worth R99
- No more waiting in queues or making late payments! Here’s how you can save money and get a quicker refund. In this booklet we tell you how to use e-filing to your benefit
- Fast Reply BONUS gift: How to Survive a SARS Audit and the accompanying CD containing 22 useful checklists
Are you ready for your SARS audit? Are you 100% sure about that? Arm yourself with ammunition like this to survive your SARS audit:
– 22 checklists to use in assessing your risk
– 13 items SARS will check about your assets
– 4 expenses SARS will target during the audit
– 11 questions you’ll be asked about your cash flow statement
– What to do when an assessment is issued
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.
Disclaimer: All material on this site is provided for information only and may not be construed as medical or financial advice or instruction. The information and opinions provided on this site are believed to be accurate and sound, based on the best judgment available to the authors, but readers who fail to consult with appropriate authorities assume the risk of any injuries or losses. The publisher is not responsible for errors or omissions.