Tag Archives: VAT

Value Added Tax (VAT) Rates Change

Effective Date:  1st April 2018

The Minister of Finance Dr. Moeketsi Majoro in his budget speech delivered in Parliament on 28 February 2018 announced changes in rates of Value Added Tax (VAT) on the supply of goods and services. Legal Notice No 27 has been published in the Government Gazette No 24 of 23 March 2018 to effect the changes. The new VAT rates are effective from 1st April 2018 and they are as follows;

  • The standard rate of VAT will change from 14% to 15%,
  • Electricity rate increases from 5% to 8%, and
  • Telecommunications rate increases from 5% to 9%.

Important Aspects to Note

Time of Supply

It is important to establish when the taxable supply is made as that is the time on which VAT should be accounted for (i.e. point at which VAT becomes payable to Lesotho Revenue Authority (LRA)). In simple terms, time of supply is the date on which the transaction occurs or is deemed to occur and that in turn determines the applicable VAT rate.

The general time of supply rule is the earlier of the date on which –

  • The goods are delivered or made available or the performance of the service is completed;
  • An invoice for the supply is issued; or
  • Payment (including part-payment) for the supply is made.

This note applies to most transactions that fall within the general time of supply rule. The note does not deal with special time of supply rules which apply on some transactions like; supplies made under rental agreements, hire purchase or finance lease, auctions, own or exempt use.

Prices Quoted or Advertised

All prices advertised or quoted by vendors for taxable supplies must include VAT at the applicable rate (unless the supply is zero-rated). Vendors must state that the price includes VAT in any advertisement or quotation, or the different elements of the total price must be stated i.e. the total amount of VAT, the price excluding VAT and the price inclusive of VAT. Vendors must therefore ensure that all price tickets, labels, quotations, advertisements, etc., reflect the new VAT rates from 1 April 2018.

Accounting Systems

From 1 April 2018, vendors must ensure that their accounting systems including sales and billing systems are updated to reflect VAT at all applicable rates. Vendors should test their systems for errors, and check that transactions are processed and reflected at the correct VAT rates.

In some instances, transactions processed after 1st April 2018 may be subject to the old VAT rate e.g. 14%. This, as previously indicated will depend on the applicable time of supply rule. This therefore means that it must be ensured that accounting systems are able to accommodate the different VAT rates.

Documents: Quotations, Cash Register Slips, Tax Invoices, Debit and Credit Notes

Vendors must ensure that any quotes received on or after 1st April 2018 correctly reflect the new VAT rates. On the other hand, cash register slips and tax invoices issued must reflect the correct VAT rate in order to avoid disputes with consumers and additional taxes and penalties where the output tax is under declared as a result of the incorrect VAT rate used.

Supplier must be contacted if an incorrect VAT rate is reflected on a document, or the amount is incorrectly calculated.

Vat Returns

The correct VAT rates must be used when calculating the input tax on goods or services acquired during the tax periods before and on or after 1st April 2018. Vendors must also ensure that adjustments reflected on the VAT returns in respect of debit or credit notes, are made at the correct VAT rates. The VAT Return has been updated to reflect the new VAT rates.

Importation of Goods

Registered importers or clearing agents must take note that Customs declarations reflect the new VAT rates, generally 15% in respect of goods entered for home consumption on or after 1st April 2018. Invoices issued by the clearing agent for their services of clearing the goods must reflect the correct standard VAT rate. The rate will depend on the general time of supply rules (that is, the earlier of when an invoice was issued, the performance of a service was completed or payment/part-payment was made).

Notes

  • This NOTICE mainly deals with the transitional aspects and does not cover all other aspects of VAT.
  • The normal requirements for a tax invoice and all other documents have not changed.
  • VAT registration and other requirements, including thresholds for registration, have not changed.
  • Care must be taken in filing VAT returns for periods after 1 April to ensure that there is no overstatement of
    input tax claimed.

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)

Valid Tax Invoice Requirements for VAT Vendors

When making a purchase for your business, you should always ensure you receive a valid VAT invoice. This enables you to claim input VAT from SARS. With the change in VAT rate from 14% to 15%, VAT has come under the spotlight. This brings more focus on VAT compliance and more specifically on when we can claim input VAT on an invoice, and what constitutes a valid VAT invoice. This is something small that is very much neglected when it comes to monthly bookkeeping. It is very important to pay attention to the invoices that are sent to your accountants as these invoices need to be “valid” before the input VAT can be claimed from the South African Revenue Service (SARS).

Please read through the following crucial information carefully with regard to valid VAT invoices.

South Africa operates on a VAT system whereby VAT registered businesses are allowed to claim the VAT (input VAT) incurred on business expenses from the VAT collected (output VAT) on the supplies made by the business. The most crucial document in such a system is the tax invoice. Without a valid tax invoice, a business cannot deduct input tax paid on business expenses.

The VAT Act prescribes that a tax invoice must contain certain details about the taxable supply made by the business as well as the parties to the transaction. The VAT Act also prescribes the timeframe within which a tax invoice must be issued (i.e. 21 days from the time the supply was made).

A business is required to issue a full tax invoice when the price is more than R5 000 and may issue an abridged tax invoice when the consideration for the supply is R 5 000 or less than R5 000. No tax invoice is needed for a supply of R50 or less. However, a document such as a till slip or sales docket indicating the VAT charged by the supplier will still be required to verify the tax deducted.

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

  • Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”;
  • Name, address and VAT registration number of the supplier;
  • Name, address and where the recipient is a vendor, the recipient’s VAT registration number;
  • Serial number and date of issue of invoice;
  • Correct description of goods and /or services (indicating where the applicable goods are second hand);
  • Quantity or volume of goods or services supplied; and
  • Value of the supply, the amount of tax charged and the consideration of the supply.

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)

Lesotho Value Added Tax (VAT) Rates Change

Effective Date:  1st April 2018

The Minister of Finance Dr. Moeketsi Majoro in his budget speech delivered in Parliament on 28 February 2018 announced changes in rates of Value Added Tax (VAT) on the supply of goods and services. Legal Notice No 27 has been published in the Government Gazette No 24 of 23 March 2018 to effect the changes. The new VAT rates are effective from 1st April 2018 and they are as follows; 

  • The standard rate of VAT will change from 14% to 15%,
  • Electricity rate increases from 5% to 8%, and
  • Telecommunications rate increases from 5% to 9%.

Important Aspects to Note

Time of Supply 

It is important to establish when the taxable supply is made as that is the time on which VAT should be accounted for (i.e. point at which VAT becomes payable to Lesotho Revenue Authority (LRA)). In simple terms, time of supply is the date on which the transaction occurs or is deemed to occur and that in turn determines the applicable VAT rate. 

The general time of supply rule is the earlier of the date on which –

  • The goods are delivered or made available or the performance of the service is completed;
  • An invoice for the supply is issued; or
  • Payment (including part-payment) for the supply is 

This note applies to most transactions that fall within the general time of supply rule. The note does not deal with special time of supply rules which apply on some transactions like; supplies made under rental agreements, hire purchase or finance lease, auctions, own or exempt use. 

Prices Quoted or Advertised 

All prices advertised or quoted by vendors for taxable supplies must include VAT at the applicable rate (unless the supply is zero-rated). Vendors must state that the price includes VAT in any advertisement or quotation, or the different elements of the total price must be stated i.e. the total amount of VAT, the price excluding VAT and the price inclusive of VAT. Vendors must therefore ensure that all price tickets, labels, quotations, advertisements, etc., reflect the new VAT rates from 1 April 2018. 

Accounting Systems 

From 1 April 2018, vendors must ensure that their accounting systems including sales and billing systems are updated to reflect VAT at all applicable rates. Vendors should test their systems for errors, and check that transactions are processed and reflected at the correct VAT rates.

In some instances, transactions processed after 1st April 2018 may be subject to the old VAT rate e.g. 14%. This, as previously indicated will depend on the applicable time of supply rule. This therefore means that it must be ensured that accounting systems are able to accommodate the different VAT rates. 

Documents: Quotations, Cash Register Slips, Tax Invoices, Debit and Credit Notes

Vendors must ensure that any quotes received on or after 1st April 2018 correctly reflect the new VAT rates. On the other hand, cash register slips and tax invoices issued must reflect the correct VAT rate in order to avoid disputes with consumers and additional taxes and penalties where the output tax is under declared as a result of the incorrect VAT rate used. 

Supplier must be contacted if an incorrect VAT rate is reflected on a document, or the amount is incorrectly calculated. 

Vat Returns 

The correct VAT rates must be used when calculating the input tax on goods or services acquired during the tax periods before and on or after 1st April 2018. Vendors must also ensure that adjustments reflected on the VAT returns in respect of debit or credit notes, are made at the correct VAT rates.
The VAT Return has been updated to reflect the new VAT rates. 

Importation of Goods 

Registered importers or clearing agents must take note that Customs declarations reflect the new VAT rates, generally 15% in respect of goods entered for home consumption on or after 1st April 2018. Invoices issued by the clearing agent for their services of clearing the goods must reflect the correct standard VAT rate. The rate will depend on the general time of supply rules (that is, the earlier of when an invoice was issued, the performance of a service was completed or payment/part-payment was made). 

Notes 

  • This NOTICE mainly deals with the transitional aspects and does not cover all other aspects of VAT.
  • The normal requirements for a tax invoice and all other documents have not
  • VAT registration and other requirements, including thresholds for registration, have not
  • Care must be taken in filing VAT returns for periods after 1 April to ensure that there is no overstatement of input tax

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)

VAT Increase and Accounting Systems

As you are aware, the National Treasury announced an increase in Value Added Tax (VAT) from 14% to 15% effective 1 April 2018.

We urge you to ensure that your accounting systems are set up to process transactions at the new VAT rate of 15% from 1 April 2018. This is to avoid any penalties or interest due to an under declaration or an over claim on your VAT201return.

Also note that vendors under Category B (March/April), Category E (annual return) and most farmers registered under Category D VAT reporting periods, will have transactions subject to the VAT rate of 14% and 15% which must be correctly reflected on the VAT201 return.

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

Claiming VAT input on “pre-enterprise” expenditure

In terms of section 17 of the Value-Added Tax Act, 89 of 1991, a registered VAT vendor is entitled to claim back any amounts of VAT paid on goods and services acquired or imported that will be used in the furtherance of that particular VAT enterprise. The ability to claim input VAT in this manner is however limited to VAT vendors only and the wording of section 17(1) makes it clear that input tax may only be claimed in respect of goods and services supplied to a vendor – in other words, a person that is already a registered vendor at the time that the goods or services are supplied to him/her.

Section 18(4) of the VAT Act provides relief for persons incurring expenses in the form of goods or services being supplied to them in anticipation of a VAT enterprise being set up. In terms of that provision, and notwithstanding section 17, where VAT is paid on goods or services acquired by a person and those goods or services will subsequently be supplied as part of a VAT enterprise, those goods or services on which VAT was paid historically will be deemed to have been supplied to that VAT vendor only at the stage that those goods or services are used by it to supply its own VAT supplies. In other words, the provision enables the person, who earlier would not have been able to enter a claim for input tax, to claim input tax on those goods and services supplied to him/her previously, before becoming a VAT vendor.

The relief is not only limited to goods or services supplied to the now-VAT vendor and on which VAT was paid, but also extends to second-hand goods which were previously acquired by it and is now also used in the furtherance of its VAT enterprise.

From a practical perspective, we often find in practice that SARS disallows such claims for input tax on the basis that the claiming vendor’s VAT number does not appear on the invoice which it would submit in support of its input VAT claim subsequently. This is obviously incongruous, since the VAT-claiming vendor under these circumstances could not have had its VAT number appear on the invoice of another vendor which supplied goods or services to it, simply since the vendor would not have had a VAT number at that stage, yet is perfectly eligible to submit a VAT input claim in terms of the provisions of section 18(4). We would argue that SARS’ approach is contradictory to the wording of section 20(4)(c) of the VAT Act which requires the following to appear on invoices submitted by vendors in support of an input tax claim:

“… the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient”.

Clearly, where a vendor submits an invoice to claim input VAT on “pre-enterprise” expenditure incurred, that vendor will not have been a registered vendor at that time, therefore in our view highly arguably not required to have its own VAT number on an invoice in order to support a claim for input VAT on “pre-enterprise” expenditure.

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)

SARS to intensify action against tax offenders

Despite the fact that SARS has upheld their philosophy of education, service, and thereafter enforcement, they have noticed an increase in taxpayers not submitting their tax returns by the stipulated deadlines, and not settling their outstanding debt with SARS. This is not limited to the current tax year but includes substantial non-compliance across previous tax years.

It is for this reason that from October 2017 SARS will intensify criminal proceedings against tax offenders. Failure to submit the return(s) within the said period could result in:

  • Administrative penalties being imposed on a monthly basis per outstanding return.
  • Criminal prosecution resulting in imprisonment or a fine for each day that such default continues.

Types of tax

SARS has reminded all taxpayers that, according to the Tax Administration Act No. 28 of 2011, it is a criminal offence not to submit a tax return for any of the tax types they are registered. These tax types are:

  • Personal Income Tax (PIT)
  • Corporate Income Tax (CIT)
  • Pay as You Earn (PAYE)
  • Value Added Tax (VAT)

It is also important to note that should any return result in a tax debt it must be paid before the relevant due date to avoid any interest for late payment and legal action. To avoid any penalties, interest, prosecutions as well as imprisonment, taxpayers are urged to rectify their compliance by submitting any outstanding returns as soon as possible. Please contact your tax advisor for 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)

Goods and services acquired by VAT vendors on credit

It is an established principle that registered VAT vendors may claim a deduction for input tax on goods or services acquired for use in the course of making taxable supplies as part of carrying on an enterprise.[1] For example, a VAT vendor purchases trading stock from another vendor for the purpose of sale to its clients subsequently. Once those goods are purchased by the VAT vendor, even if on credit, input tax may generally be claimed on the goods purchased.

Where the VAT vendor above buys the goods on credit, the input tax claimed may effectively be reversed if payment to the creditor is not forthcoming timeously. In terms of section 22(3) of the VAT Act, where the consideration for the purchase of goods have not been paid by the VAT vendor to its supplier within 12 months of it buying the goods, a portion of the input tax claimed must be effectively reversed and paid over to SARS as output VAT. In other words, where a VAT vendor has claimed input tax, but has not yet settled the amount due to the person providing it with those goods or services in respect of which the input tax is claimed, the input tax claim will be effectively cancelled.

Although it may appear to be a trivial matter to most, the question does become relevant where goods or services are supplied between related persons or entities, such as group companies for instance. When “payment” is made for purposes of the VAT Act has recently been considered in the case of XYZ Company (Pty) Ltd v CSARS.[2] In that case a VAT supply was made between a holding company and its subsidiary, with the amount owing subsequently being moved from the debtors’ book to the loan account which the subsidiary company had in place with the holding company. SARS contended that the purchase price remaining outstanding on loan account has not yet been paid by the subsidiary, and therefore the input tax claimed by the subsidiary had to be accounted for as output tax after 12 months of the supply taking place.

The Tax Court however differed and attributed a wide meaning to the word “paid”. It held that the action of transferring the debt due from the debtors’ book to the loan account of the parties amounted to the payment of the debt arising from the supply. The holding company acquired a new right with new terms, being those linked to the newly created loan account and which differed from the trade debt, even though the counter-party was unchanged. Payment, in a wide sense, is not limited to cash flow only, but also include an exchange and creation of new rights and obligations.

While the judgment deals specifically with the context of section 22(3), a consideration whether amounts have been “paid” or not are not limited to this provision only and the effect thereof may extend wider to other provisions of the VAT Act too, the provisions of section 16(3) – which deal with input tax claimed on second hand goods acquired – being a pertinent example.

References:

[1] Section 17(1) of the VAT Act, 89 of 1991

[2] Case No.: VAT 1247, 5 September 2016 (Cape Town)

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)

Non-executive directors’ remuneration: VAT and PAYE

Two significant rulings by SARS, both relating to non-executive directors’ remuneration, were published by SARS during February 2017. The rulings, Binding General Rulings 40 and 41, concerned the VAT and PAYE treatment respectively to be afforded to remuneration paid to non-executive directors. The significance of rulings generally is that it creates a binding effect upon SARS to interpret and apply tax laws in accordance therewith. It therefore goes a long way in creating certainty for the public in how to approach certain matters and to be sure that their treatment accords with the SARS interpretation of the law too – in this case as relates the tax treatment of non-executive directors’ remuneration.

The rulings both start from the premise that the term “non-executive director” is not defined in the Income Tax or VAT Acts. However, the rulings borrow from the King III Report in determining that the role of a non-executive director would typically include:

  • providing objective judgment, independent of management of a company;
  • must not be involved in the management of the company; and
  • is independent of management on issues such as, amongst others, strategy, performance, resources, diversity, etc.

There is therefore a clear distinction from the active, more operations driven role that an executive director would take on.

As a result of the independent nature of their roles, non-executive directors are in terms of the rulings not considered to be “employees” for PAYE purposes. Therefore, amounts paid to them as remuneration will no longer be subject to PAYE being required to be withheld by the companies paying for these directors’ services. Moreover, the limitation on deductions of expenditure for income tax purposes that apply to “ordinary” employees will not apply to amounts received in consideration of services rendered by non-executive directors. The motivation for this determination is that non-executive directors are not employees in the sense that they are subject to the supervision and control of the company whom they serve, and the services are not required to be rendered at the premises of the company. Non-executive directors therefore carry on their roles as such independently of the companies by whom they are so engaged.

From a VAT perspective, and on the same basis as the above, such an independent trade conducted would however require non-executive directors to register for VAT going forward though, since they are conducting an enterprise separately and independently of the company paying for that services, and which services will therefore not amount to “employment”. The position is unlikely to affect the net financial effect of either the company paying for the services of the non-executive director or the director itself though: the director will increase its fees by 14% to account for the VAT effect, whereas the company (likely already VAT registered) will be able to claim the increase back as an input tax credit from SARS. From a compliance perspective though this is extremely burdensome, especially in the context where SARS is already extremely reluctant to register taxpayers for VAT.

Both rulings are applicable with effect from 1 June 2017. From a VAT perspective especially this is to be noted as VAT registrations would need to have been applied for and approved with effect from 1 June 2017 already. The VAT application process will have to be initiated therefore by implicated individuals as a matter of urgency, as this can take several weeks to complete.

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)

VAT and Common Law Theft

A recent decision has created some interest in whether the taxpayers failing to pay over the correct amounts of VAT can be charged – in addition to other statutory crimes prescribed by the VAT Act, 89 of 1991 – with the common law crime of theft.

In Director of Public Prosecutions, Western Cape v Parker[1] the Director of Public Prosecutions (“DPP”) appealed a decision by the Western Cape High Court that Parker, in his capacity as sole representative of a close corporation, had not committed common law theft in relation to the misappropriation of VAT due and payable by the close corporation to SARS. (Parker had been convicted of common law theft earlier in the Bellville Regional Court and sentenced to five years’ imprisonment, which conviction he appealed to the High Court.)

The Supreme Court of Appeal dismissed the appeal by the DPP as related to the charge of common law theft levied against Parker as related to the misappropriation of VAT amounts, due and payable to SARS. Essentially to succeed, the DPP had to show that the monies not paid over to SARS were in law monies received and held effectively by VAT vendors as agents or in trust on behalf of SARS, i.e. that SARS had established ownership over such funds even before it having being paid over. The court directed that no relationship could be established whereby VAT amounts due were received and held by VAT vendors prior to payment thereof over to SARS. In other words, the DPP could not show that Parker had misappropriated property which belonged to another – an essential element of common law theft that had to be present to secure a conviction.

VAT remains a tax in the proper sense of the word: monies received from customers were that of the taxpayer. Only once monies were paid over to SARS did it become SARS’ property. Even when the VAT in question became payable, such obligation did not per se create a right of ownership over the funds for SARS. Admittedly SARS has a legal claim against the taxpayer for an amount of tax, but it cannot be said to have established right of ownership over any specific funds held by the taxpayer.

It should be noted that Parker only appealed his conviction of common law theft. He was also convicted in the Regional Court of those crimes provided for in the VAT Act (section 28(1)(b) read with section 58(d)) which he did not appeal. His sentence in this regard was maintained, being either a fine of R10,000 of two years’ imprisonment, suspended for four years.

[1] [2015] 1 All SA 525 (SCA)

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)

Apportionment of VAT input claims

Generally speaking, the VAT portion of expenditure incurred by a VAT vendor in carrying on its enterprise may be claimed back from SARS when the VAT vendor submits is VAT returns on a periodical basis. Typically, these input tax claims are set off against the output tax liability that the VAT vendor may have. However, it is also often the case that the total input tax claims for a certain period may exceed the total output tax amount payable, resulting in a net refund amount due to the vendor for that particular period.

Section 17 of the VAT Act, 89 of 1991, governs the circumstances and the extent to which a registered VAT vendor may claim input tax to be set off against the output tax due to SARS. It specifically addresses those circumstances when goods or services are acquired partly for use as part of the VAT vendor’s enterprise, and partly for purposes of making VAT exempt or personal supplies. In such instances section 17(1) limits the amount of input tax to be claimed to “… an amount which bears to the full amount of such tax or amount, as the case may be, the same ratio (as determined by the Commissioner in accordance with a ruling …) as the intended use of such goods or services in the course of making taxable supplies bears to the total intended use of such goods or services”.

The ruling referred to in section 17(1) (Binding General Ruling 16, Issue 2) sets out the formula as:

y = a / (a + b + c) x 100

Where:
“y” =      the apportionment ratio/percentage;
“a” =    the value of all taxable supplies (including deemed taxable supplies) made during
the period;
“b” =      the value of all exempt supplies made during the period; and
“c” =    the sum of any other amounts not included in “a” or “b” in the formula, which were received or which accrued during the period (whether in respect of a supply or not).

In other words, the calculation referred to aims to limit the input tax deduction to the extent that the expenditure item in question is incurred in the furtherance of the VAT enterprise only.

The calculation assumes that expenditure would be incurred by the VAT vendor generally proportionate to the total taxable supplies made by the enterprise vis-à-vis non-taxable supplies. It may very well be that that this assumption is inapplicable based on the facts of the VAT vendor. For example, where a company extends interest bearing loans to customers (thus exempt supplies) while also providing consulting services (a standard rate taxable supply), the above formula may very well be applicable to apportion the portion of input tax claimable on e.g. rent paid on offices and used both to earn interest and consulting income. However, where expenditure is incurred e.g. towards training for employees linked directly to the consulting business only, said expenditure would not be partly incurred for making taxable supplies and partly not, but wholly for the furtherance of the VAT enterprise and thus rank wholly as a claim for input tax.

BGR16 itself provides for an alternative basis of apportionment to be applied if a more appropriate basis exists. It should be borne in mind that section 17(1) also only comes into play if there is an apportionment to be made whatsoever.

We have noted that SARS is applying BGR16 strictly as part of VAT audits in recent months and even if it may be inappropriate to do so where it is to the disadvantage of taxpayers. Such instances should be monitored and pointed out to your tax advisors when applicable to take up with the SARS auditors timeously.

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)