VAT (Value Added Tax)

The current Diesel Rebate is:

01/04/2004 – 31/03/2005 @ 80% = 63.36

01/04/2005 – 31/03/2006 @ 80% = 71.5

01/04/2006 – 31/03/2007 @ 80% = 76.5

01/04/2007 – 31/03/2008 @ 80% = 83.5

01/04/2008 – 31/03/2009 @ 80% = 90.00

01/04/2009 – 31/03/2010 @ 80% = 118.00

01/04/2010 – 31/03/2011 @ 80% = 130.00

01/04/2011 – 31/03/2012 @ 80% = 142.00

VAT Act

Standard rates
Zero rated items
- Supply of Goods Used or Consumed for Agricultural, Pastoral or other Farming Purposes
- Supply of goods consisting of certain foodstuffs
- Farmers should look at the following Sales items:
  - Animal Feed
  - Seed
  - Milk
  - Fruit
  - Vegetables
Exempted items
- Farmers should look at the following items:
  - Interest Received
  - Dividends Received
  - Personal Income
  - Payouts made for Life Insurance
  - Profit/Loss when selling shares

Goods That Can be Zero-rated

The basic principle of Vat is that goods supplied by a vendor are generally subject to Vat at the standard rate of 14%.

But the Vat Act allows a Vat vendor to supply certain goods at the zero rate.

These goods include:

Goods that are exported
The sale of an enterprise (or part thereof) as a going concern
The supply of gold to the SA Reserve Bank, South African Mint and registered banks
The supply of goods for farming purposes
Petrol or distillate fuel oil subject to the fuel levy
The supply of goods to a branch or main business in an export country
Certain specified foodstuffs
The supply of gold coins by the South African Mint (but not those set into jewellery)
The supply of illuminating kerosene
Supplies to Industrial Development Zones
Conversion of old order mineral rights
Renewal of mineral rights
Foreign donor funded projects (where supplies are made to the foreign donor)
The disposal of an enterprise (or part thereof) as a going concern, between separately registered vendors who fall within the same legal entity
Supply of goods by a non-resident to a vendor where that vendor delivers the goods in South Africa
Compensation received from a public authority to supply a “controlled animal or thing”.

There’s a pile of documents you have to keep

But for each of these goods, you must collect specific documentation, to prove to SARS why you zero-rated the supply of these goods. In fact, without these documents, SARS might find you guilty of evading tax!

The list of documents varies from one supply to the next! And seeing as SARS has just updated the rules around this, you’d better get your ducks in a row.

3 Things to Remember About Exempt Vat Supplies

The general rule is that if you’re registered as a Vat vendor, you must include Vat at the standard rate or zero-rate, in the price of your goods and services. And then if you have a Vat liability, you pay the assessed amount over to SARS in your defined tax period.

But there’s a significant exception to this general rule: Exempt Vat supplies! And there are three things to remember about exempt supplies:

You don’t include Vat in the price of exempt goods
You don’t incldue the value of the exempt supplies in your taxable turnover
If you ONLY supply exempt goods or services, you don’t have to register as a Vat vendor.

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

Use this failsafe rule to solve your Vat dilemma 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 (e.g. life insurance, medical schemes, etc)
Supply by a charitable organisation of any donated goods (e.g. the Child Welfare centre that sells donated teddy bears, to raise funds)
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
Letting of leasehold land, where the land will be used for erecting dwellings
Service of caring for children by a crèche or an after-school care centre (after-care).