Category: Tax (page 1 of 12)

Section 18A Audit Certificates – Part II

The South African Revenue Service (“SARS”) issued Interpretation Note 112 (“IN112”) on 21 June 2019 to provide guidance on the interpretation and application of the audit certificate requirement as set out in section 18A of the Income Tax Act.[1] This was due to the fact detailed information on this requirement was not included in section 18A, resulting in uncertainties regarding compliance with these provisions.

Section 18A allows for an income tax deduction for donations made to certain approved organisations. These organisations include approved public benefit organisations (“PBOs”), certain specified agencies, programmes, funds, the High Commissioner, offices, entities or organisations[2]  (“approved organisations”) as well as certain government departments.[3]

However, the term “audit certificate” is not defined in section 18A. In terms of the guidance, this constitutes a physical document that provides an opinion on the use of donations for which the relevant entity issued section 18A receipts.

It is recommended that the person from whom an audit certificate is obtained should be independent of the relevant entity and suitably qualified. The IN112 lists examples of such persons for the different types of approved entities. For example, for PBOs, it may be an independent auditor or reviewer[4], while for trusts, it may be a bookkeeper not employed by the trust.

In general, the audit certificate should express an opinion confirming that all the donations for which section 18A certificates were issued were used solely for public benefit activities (“PBAs”) in Part II of the Ninth Schedule to the Income Tax Act.[5] In terms of IN112, additional information that should be included are details of the approved entity, details of the person issuing the audit certificate and details of the work performed. The latter includes, amongst others, a description of the work that formed the basis for the opinion reached and the tests performed. SARS recognises that detailed testing poses practical difficulties but requires an express statement that sufficient and appropriate audit evidence was obtained.

Please note that PBOs are not required to submit the audit certificate with its annual income tax return, though SARS may request it at any point. A government department must, however, submit the audit certificate annually. IN112 furthermore provides guidelines on the retention of audit certificates (generally for a period of 5 years).

The take away is that entities with section 18A status should carefully consider IN112 to ensure that they comply with all the requirements with regards to audit certificates.

[1] No. 58 of 1962

[2] Section 18A(1)(bA)

[3] Section 18A(1)(c)

[4] Appointed under the Companies Act No. 71 of 2008

[5] Section 18A(2B) with reference to section 18A(2A). Please see distribution requirement for PBOs providing funds or assets to other PBOs (referred to as “conduit PBOs”)

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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Spaarfondse voordele

Die drie spaarfondse wat voordeel inhou vir ‘n individu met aftrede, is ‘n pensioenfonds, uittree-annuïteitsfonds, en ‘n voorsorgfonds.

Vanaf 1 Maart 2016 geld die volgende:

  • Bydraes wat deur werkgewers aan bogenoemde aftree-fondse gelewer is word belas in die hande van die werknemer as ‘n byvoordeel;
  • Die volle bydrae van die werkgewer kan deur die werkgewer afgetrek word; en
  • Belastingaftrekkings vir “bydraes gemaak” is beperk tot R350 000; of die grootste van 27.5% van vergoeding of belasbare inkomste (insluitend belasbare kapitaalwins). Dus die maksimum bedrag wat jaarliks afgetrek kan word vir belastingdoeleindes is R350 000.

Bydraes wat die maksimum aftrekking van R 350 000 (beperk tot werklike bydraes gemaak) oorskry, word oorgedra na die volgende jaar en is dan onderhewig aan daardie jaar se perke.

Surplus bydraes aan pensioenfondse en uittree-annuïteitsfondse wat voor 1 Maart 2016 gelewer is het oorgedra, maar nie op bydraes tot voorsorgfondse wat voor 1 Maart 2016 gelewer is nie. Slegs bydraes wat aan voorsorgfondse gelewer is na 1 Maart 2016 en die perk oorskry, is oorgedra.

Bydraes wat nie as aftrekkings gebruik is wanneer ‘n individu ‘n fonds verlaat nie, kan verreken word teen die belastingpligtige se aftreevoordele by aftrede. Dit sal wel eers teen die enkelbedrag en daarna teen die annuïteitsinkomste verreken word.

Werkgewers kan die belastingaftrekking in berekening bring wanneer werknemers se maandelikse inkomstebelasting bereken word. Die maksimum bedrag wat afgetrek word per maand kan nie R29 167 oorskry nie aangesien dit gelykstaande is aan die maksimum bedrag van R350 000 wanneer dit oor 12 maande versprei is.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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SARS dispute: What are the reasons?

Generally, disputes with the South African Revenue Service (SARS) are the result of an assessment which has been issued by SARS to a taxpayer. An assessment is the determination of an amount of a tax liability or refund, by way of self-assessment by the taxpayer (such as in the case of VAT) or assessment by SARS (such as in the case of income tax). If taxpayers are not satisfied with an assessment, the Tax Administration Act provides for dispute resolution mechanisms, in terms of which taxpayers can object to the assessment, and subsequently appeal, if objections are not maintained.

Although objection to an assessment is the correct procedure to dispute a tax amount, taxpayers often lodge objections against assessments, without knowing exactly what they are objecting to. This could seriously jeopardise a taxpayer’s case, since taxpayers may not appeal on a ground that constitutes a new objection against a disputed assessment. If a valid ground of objection is therefore not addressed in the objection itself, taxpayers may lose the opportunity to object to a specific ground.

For example: when an assessment is raised by SARS because “expenses are not allowed as a deduction” it could be as a result of, among others, the following:

  • SARS considers the taxpayer not to carry on a trade;
  • SARS considers the expense not to have been incurred in the production of income;
  • SARS considers the expense not to have been actually incurred; or
  • SARS considers the expense to be of a capital nature.

Without having reasons for the assessment, the taxpayer cannot properly formulate its grounds of objection and may, therefore, find itself in a position where the real grounds for the assessment, may not be challenged on appeal.

In terms of Rule 6 of the dispute resolution rules, a taxpayer who is aggrieved by an assessment may request that SARS provide reasons for an assessment. The reasons provided by SARS must enable the taxpayer to formulate its grounds of objection. The reasons for any administrative action must include the reasons for the conclusion reached, and it is not enough to merely state the statutory grounds on which the decision is based or repeat the wording of the legislation. The decision-maker should furthermore set out his understanding of the relevant law.

A request for reasons for an assessment must be made within 30 business days from the date of assessment. Taxpayers (and their practitioners) are therefore encouraged to consider assessments as soon as they are issued by SARS. If there is any doubt as to why the assessment has been issued, a formal request for reasons should be issued without delay.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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What’s new in the world of tax?

On 21 July, National Treasury and the South African Revenue Service (SARS) released the second batch of draft tax amendments for the 2019 legislative cycle, which includes both proposed substantive tax amendments, and administrative changes. This follows the release of the first batch on 10 June 2019, dealing predominantly with addressing abusive arrangements aimed at avoiding the anti-dividend stripping provisions as well as aligning the effective date of tax-neutral transfers between retirement funds with the effective date of annuitisation for provident funds, which is 1 March 2021.

Some of the main items addressed in the second round of draft bills are:

  • Clarifying the interaction between corporate reorganisation rules and other provisions of the Income Tax Act;
  • Refining the tax treatment of long-term insurers; and
  • Refining investment criteria and anti-avoidance measures for the Special Economic Zone regime.

Practitioners are currently scrutinising the bills and getting to grips with the proposed changes. There are, however, two proposed changes of which the public should take immediate notice.

Review of section 72 of the Value-Added Tax Act

The VAT Act contains provisions in section 72 that provide SARS with the discretionary powers to make arrangements in which the provisions of the VAT Act can be applied. This power can be exercised where any vendor or class of vendors conduct their business in such a way that difficulties, anomalies or incongruities arise regarding the application of the VAT Act. The arrangement or decision by the Commissioner as provided under section 72 must have the effect of assisting the vendor to overcome the difficulty, anomaly or incongruity without having the effect of substantially reducing or increasing the taxpayer’s ultimate liability for VAT.

Challenges have arisen regarding the application of the mandatory wording of the other provisions of the VAT Act versus the discretionary wording of the provisions of section 72 of the VAT Act. Because the provisions of the VAT Act are in itself mandatory, to address this anomaly, it is proposed that changes be made in section 72 of the VAT Act to align the provisions of this section with the spirit of the other provisions of the VAT Act.

Reviewing the allowable deduction for venture capital companies (“VCC”)

Government has endeavoured to end the perceived abuse within the VCC tax incentive regime by making changes in the provisions of the incentive aimed at re-emphasising an incentive for true venture capitalists that saw the same value-add in the VCC tax incentive regime as Government and not just as another method of finance, especially of “own projects”. National Treasury indicates that, despite Government’s efforts to introduce anti-avoidance measures, it has come to their attention that some taxpayers are still attempting to undermine the objectives and principles of the VCC tax incentive regime to benefit from excessive tax deductions. Based on administrative data on tax expenditure, the average expenditure per annum incurred by a new VCC shareholder to obtain VCC shares ranged between R1,3 million at its lowest to R2,1 million at its highest over the past four years.

In an effort to balance the benefit and perceived effectiveness of the VCC tax incentive regime whilst still protecting the bottom-line impact of high tax expenditure on the fiscus, it is proposed that changes be made in the VCC tax incentive regime to reintroduce a limitation of the amount to be deducted in respect of taxpayers’ investments in VCC shares. To consider the effect of inflation and to further balance the intended impact of the VCC tax incentive on both small business and the fiscus, it is proposed that the tax deduction in respect of investment in VCC shares should be limited to R2,5 million per annum per VCC shareholder.

National Treasury will accept written comments on the draft bills until the close of business on 23 August 2019. The public is encouraged to engage with their tax practitioners if there are any matters that they wish to bring to the National Treasury’s attention.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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Audit certificates: What you need to know?

The South African Revenue Service (“SARS”) issued Interpretation Note 112 on 21 June 2019 to provide guidance on the interpretation and application of the audit certificate requirement as set out in section 18A of the Income Tax Act.[1]

For background purposes – section 18A provides a taxpayer with an income tax deduction for bona fide donations paid to certain approved organisations such as qualifying public benefit organisations (“PBOs”) and other approved agencies, programmes, funds, the High Commissioner, offices, entities or departments.

The requirements needed to qualify as a PBO are set out in section 30 of the Income Tax Act. Part I of the Ninth Schedule to the Income Tax Act lists a variety of activities that are considered to be public benefit activities (“PBAs”) for purposes of section 30. Only certain of these PBAs will result in the approved organisation qualifying for section 18A status. These activities are listed in Part II of the Ninth Schedule.

In terms of section 18A(2A), these approved organisations may only issue section 18A receipts to the extent that the donation received or accrued during the year of assessment will be used to carry on PBAs as set out in Part II of the Ninth Schedule.[2] For conduit PBOs (i.e. PBOs set up to provide funding or assets to other PBOs), 50% of the donations must be distributed within 12 months and the funds must be used by the second PBO to carry on Part II PBAs.[3]

Approved organisations are allowed to conduct a combination of Part I and Part II activities. In order to ensure that section 18A receipts are issued only in respect of donations that would be, and ultimately are, used for purposes of Part II PBAs, approved organisations are required to obtain and retain an audit certificate.[4] This is seen as a reasonable requirement given the fact that the person making the donation could claim a tax deduction if issued with a section 18A receipt and the approved organisation receiving the donation is exempt from income tax.

To date, section 18A did not include detailed requirements with regards to the audit certificate. Examples include the information that must be contained in the audit certificate and from whom the audit certificate should be obtained in certain instances. As a result, uncertainty exists on how to comply with the audit certificate requirements. Interpretation Note 112 was therefore issued to provide guidance in this regard.

Approved organisations should therefore carefully consider Interpretation Note 112 to ensure that the audit certificate meets all the relevant content requirements, is obtained from the correct body or authority and is timeously submitted to SARS.

[1] No. 58 of 1962

[2] Section 18A(2A)(a)

[3] Section 18A(2A)(b)

[4] Section 18A(2B)

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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Alles wat jy moet weet oor skenkingsbelasting

Is jou kennis genoegsaam oor skenkingsbelasting? Dink jy dalk daaraan om ń familielid finansieel by te staan, of om ń kind te help met ń deposito vir die aankoop van ‘n huis of motorvoertuig? Voor jy die transaksie aangaan is daar ń paar dinge wat jy in gedagte moet hou wanneer dit by ń skenking en skenkingsbelasting kom.

Wat is skenkingsbelasting?

Skenkingsbelasting is belasting betaalbaar teen ń vaste koers van eiendom wegmaking deur skenkings (artikel 54 van 64 van die Wet op Inkomstebelasting, 1962).  Skenkingsbelasting word teen ń vaste koers van 20 % gehef op die waarde van eiendom geskenk.

Deur wie is skenkingsbelasting betaalbaar en wie word vrygestel?

Skenkingsbelasting is van toepassing op enige individu, maatskappy of trust wat as ń inwoner geklassifiseer word, soos omskryf in artikel 1 van die Inkomstebelasting, 1962.

Artikel 56(1) van die inkomstebelastingwet bevat ń lys van vrygestelde skenkings wat die volgende insluit:

  • Skenkings tussen gades;
  • Skenkings kleiner of gelyk aan R100 000 vir ń jaar van aanslag, per individu;
  • Skenkings aan goedgekeurde openbare liefdadigheidsorganisasies;
  • Skenkings deur nie-inwoners;

Wanneer moet skenkingsbelasting betaal word en hoe moet dit betaal word?

  • Skenkingsbelasting moet aan die einde van die maand wat volg op die maand waarin die skenking in werking tree betaal word of sodanige langer tydperk as wat SARS toestaan;
  • Nadat jy ń skenking gemaak het, moet jy ń IT144 vorm (verklaring deur skenker/ontvanger) invul en aan SARS stuur, tesame met die bewys van die skenking;
  • Skenkingsbelasting kan deur eFiling betaal word.

Daar is dus verskeie faktore wat in ag geneem moet word wanneer ń skenking gemaak word. Dit is dus raadsaam om ń belastingkonsultant te raadpleeg, ten einde die belastingimplikasies te bespreek, voordat ń besluit geneem word.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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Tax season 2019: What can you expect?

SARS recently released two media statements, in which it notes several improvements made to eFiling for the 2019 tax season, including the issue of customised notices indicating specific documents required in the event of an audit or verification and a simulated outcome issued before a taxpayer has filed.

What is the tax season?

Tax season is the period in which individual taxpayers file their income tax returns to ensure that their affairs are in order. Although the majority of taxpayers who earn a salary have already paid tax through monthly pay-as-you-earn tax (PAYE), which was deducted from their salary by their employer and paid over to SARS, employees may still have an obligation to file a tax return if they earn above the filing threshold (see in more detail below). Once SARS reconciles what was paid over by the employer with what a taxpayer declares on their tax return, an assessment is issued which may result in the taxpayer needing to pay an additional tax to SARS, or is due a refund, or neither.

Taxpayers who are natural persons and meet all of the following criteria need not submit a tax return for the 2019 filing season:

  • Your total employment income for the year before tax is not more than R500 000;
  • Your remuneration is paid from one employer or one source (if you changed jobs during the tax year, or have more than one employer or income source, you must file);
  • You have no car or travel allowance, a company car fringe benefit, which is considered as additional income;
  • You do not have any other form of income such as interest, rental income or extra money from a side business; and
  • Employees tax (i.e. PAYE) has been deducted or withheld

Although you are not required to submit a tax return if you meet the above criteria, it is always good practice to ensure that you have a complete filing history with SARS. If your tax records do ever become important in future (such as in the case of remission of penalties, tax clearance certificates, etc.), you do not want to be in a position to have to prove that you were not liable to file a return in a particular year. The administrative burden in the current year certainly outweighs the potential issues down the line.

Important filing dates

  • eFiling opens on 1 July 2019 and closes on 4 December 2019.
  • Manual filing at branches opens on 1 August 2019 and closes 31 October 2019.
  • Provisional taxpayers have until 31 January 2020 to file via eFiling.

There is already a steady increase in the number of taxpayers in queues at SARS branches – it is therefore advised that you engage with your tax practitioner as soon as possible, to plan for tax season 2019.

Feel free to contact us should you have any questions or require assistance.

 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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Belasting op buitelandse indiensnemingsinkomstes

Artikel 10(1)(o)(ii) bied verligting aan belastingbetalers deur nie op buitelandse indiensnemingsinkomste (“employment income”) belas te word nie aangesien die buitelandse maatskappy reeds LBS / belasting op daardie inkomste aftrek. Daar is egter sommige lande waar hul eie belastingwette bepaal dat geen belasting op buitelandse indiensnemingsinkomste afgetrek word nie. Die effek daarvan is dat sekere individue dan effektief geen belasting in enige land betaal nie.

Artikel 10(1)(o)(ii) is gevolglik hersien en die wysigings waaroor almal gons tree effektief 1 Maart 2020 in werking. Ingevolge die wysigings sal slegs die eerste R1 miljoen van buitelandse indiensnemingsinkomste vrygestel wees van belasting. Enige buitelandse indiensnemingsinkomste van meer as R1 miljoen sal in Suid-Afrika belas word deur die normale individuele belastingtabelle toe te pas. Die effektiewe belastingkoers sal bepaal word met verwysing na die totale wêreldwye inkomste en geagte inkomste, verminder met die eerste R1 miljoen ten opsigte van buitelandse inkomste uit indiensneming.

Artikel 10(1)(o)(ii) vrystelling

Die vrystelling is slegs van toepassing indien –

  • die werknemer gedurende enige 12 maande tydperk vir meer as 183 volledige dae in totaal buite Suid-Afrika was; en
  • hierdie tydperk ’n aaneenlopende tydperk van afwesigheid van minstens 60 volledige dae binne daardie 12 maande insluit; en
  • die dienste gedurende die tydperk van afwesigheid uit Suid-Afrika gelewer word; en
  • die dienste gelewer is vir of namens ’n werkgewer wat binne of buite Suid-Arika gestasioneer is.

Dit is baie belangrik om daarop te let dat hierdie vrystelling slegs op belastingpligtiges van toepassing is wat ingevolge die Inkomstebelastingwet, soos omskryf in artikel 1, as inwoners beskou word.

Inwonerstatus

Suid-Afrika maak gebruik van ’n inwonergebaseerde belastingstelsel, wat beteken dat inwoners op hul wêreldwye inkomste belas word. Al werk jy al vir jare oorsee, maar jou tuisland is steeds Suid-Afrika, moet alle buitelandse inkomste steeds aan die Suid-Afrikaanse Inkomstediens verklaar word en die toepaslike belasting daarop afgetrek word. Ten opsigte van nie-inwoners is slegs ontvangstes en toevallings uit ’n Suid-Afrikaanse bron aan normale belasting in Suid-Afrika onderhewig.

Uit bogenoemde is dit waarskynlik dat baie buitelandse werknemers nie deur die wysigings aan artikel 10(1)(o)(ii) geraak word nie, aangesien hulle in elk geval nie as inwoners (vir Suid-Afrikaanse belastingdoeleindes) beskou word nie.

’n Belastingpligtige sal as ’n inwoner beskou word indien daar aan een van die onderstaande toetse voldoen word:

(1)   die gewoonlik woonagtig-toets; of

(2) die fisiese teenwoordigheidstoets en die persoon word nie geag uitsluitlik ’n inwoner van ’n ander land te wees vir die doeleindes van enige dubbelbelastingooreenkoms nie.

’n Persoon wat ingevolge ’n dubbelbelastingooreenkoms tussen die land waarin hul werk en Suid-Afrika as ’n uitsluitlike inwoner van die ander land geag word, sal nie as ’n inwoner van Suid-Afrika kwalifiseer nie, selfs al voldoen die persoon aan die voorvereistes om as ’n inwoner te kwalifiseer.

Finansiële emigrasie (FE)

’n Algemene wanpersepsie om nie as ’n inwoner geag te word nie, is om finansieel uit Suid-Afrika te emigreer. FE is nie ’n voorvereiste om vir belastingdoeleindes te emigreer nie en dit veroorsaak of waarborg ook nie dat ’n persoon na FE ’n nie-inwonerstatus sal bekom nie.

FE is ’n formele aansoek aan die Suid Afrikaanse Reserwe Bank om ’n nie-inwoner te word vir ruilbeheerdoeleindes (exchange control purposes).

Indien ’n persoon wél finansieel emigreer het kan dit hul saak versterk dat hul nie aan die gewoonlik woonagtig-toets voldoen nie, en dus as nie-inwoner geag moet word.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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Value-Added remarks on Value-Added Tax (VAT)

VAT is an integral part of our economic society and is something that influences everyone, especially businesses in South Africa.  In this article, we will discuss a few do’s and don’ts regarding VAT.

  1. Valid tax invoices

In South Africa’s current tax system, vendors that are registered for VAT are allowed a deduction for the tax they pay on eligible goods or services (input tax) from the tax you collect on the sales made (output tax). Tax invoices are therefore very important to vendors as failure to provide valid documentation during VAT audits will cause the vendor to lose all the input tax being claimed on the invoice. The following requirements will overcome the challenges that may be encountered because of SARS scrutinising the validity of VAT invoices.

When the tax invoices exceed R5 000, a full tax invoice needs to be provided. For invoices of R5 000 or below they may issue an abridged tax invoice. There will be no tax invoice needed if the consideration is R50 or less. However, documents such as a sales docket or till slip will be necessary to verify the input tax deducted.

As from 8 January 2016, the following information must be reflected on a tax invoice for it to be considered valid:

  1. Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”
  2. Name, address and VAT registration number of the supplier
  3. Serial number and date of issue of invoice
  4. Accurate description of goods and/or services (indicating where applicable that the goods are second-hand goods)
  5. Value of the supply, the amount of tax charged and the consideration of the supply
  6. Name, address and where the recipient is a vendor, the recipient’s VAT registration number
  7. Quantity or volume of goods or services supplied

Note that an abridged tax invoice will only need to meet criteria 1 to 5, whereas the full tax invoice (tax invoices exceeding R5 000) must meet all criteria.

  1. When to declare output VAT/claim input VAT

The date on which VAT becomes due on a transaction is the earliest of either the payment date or the invoice date. For example, if a payment is received in advance of the invoice issued for the supply, the VAT will be due on the date of receipt of payment. It is important to note that output VAT should be declared in the period in which the invoice has been issued or the payment has been received. With regards to input VAT, here the 5-year rule applies.

This rule provides that any amount of input tax which was deductible and has not yet been deducted can be claimed in a following period but is limited to a tax period 5 years after which the tax invoice should have been issued.

  1. Overpayments by the customer

When a vendor receives an overpayment from a customer, that vendor will not declare VAT on the overpayment. If a vendor fails to refund the overpayment within 4 months of the date of the invoice, the excess amount is deemed to be a consideration and therefore output VAT should be declared on the last day of the VAT period during which the 4-month period ends at a tax fraction of 15/115.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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