TAXF 211

Value Added Tax-

Administration
Prof K Coetzee
SATSA Chapter 2
 Fakulteit
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TAXF 211
VAT– ADMINISTRATION
2023
2023
Prof K Coetzee
SU 5
SATSA:
LEARNING OUTCOMES

Therefore:
• define the most important definitions in the
VAT Act;
• identify and explain what accounting bases
may be used and explain which bases to apply
for;
• explain how long a VAT period is;
• identify when and at what rate VAT is levied;
• determine the value of a supply;
• state when a supply is an exempt supply;

3
LEARNING OUTCOMES (continued...)

• list and explain the timing rules for

supplies;
• list the requirements for the documents
that are the driving force of the VAT
system;
• determine when input tax will be denied;
• list the registration requirements and
apply these requirements to a given set
of facts;
• calculate the VAT payable or refundable
for a relevant tax period; 4
VAT section 7
 Fakulteit
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Admin - registration
Registration: time of supply; basis; tax
invoices tax periods; fines etc
3. Vendor – compulsory registration
(2.6.3.1)
Continued…
• Sec 23(1) person is required to register
– Taxable supplies > R 1 mill in prior 12 months
(at end of month during which complies)

– Anticipated taxable supplies > R 1 mill in

12mnths (at beginning of month anticipated)

– Foreign suppliers of electronic services

• Taxable supplies > R50 000
(at end of month complies)
• Amount of "taxable supplies"
7 excludes VAT
3. Vendor – compulsory
registration

Continued…

• SARS could investigate any 12

month period

• “Taxable supplies” excludes

exempt supplies

8
3. Vendor – compulsory
registration

• If Natural Person carries on more than one

Continued…
enterprise–
– And taxable supplies of all enterprises > R 1milj
– Has to register
– Person registers – not the enterprise

• If enterprises in separate companies

– Seen as separate persons
– Each must > R 1mill before compulsory to
register

9
Example 3

Ms Zulu caries on three different enterprises that only

make taxable supplies. All three enterprises are
carried on in her own name.

Supplies for the 12 months (VAT exlcuded):

Enterprise 1: R 360 000
Enterprise 2: R 320 000
Enterprise 3: R 340 000
: R1 020 000

Should Ms Zulu register for 10VAT? Why?

3. Vendor – voluntary registration
From 1
April 2015

a person may register voluntarily if :

• conducting an enterprise and if:
– value of his taxable supplies of all enterprises
>R50 000 in past 12months or
– Total value of taxable supplies not yet >R50 000 –
expect to be within 12 months from registration >R50
000

• If <R50 000 – payments basis until >R50 000

• SARS could deregister a person if not comply
to requirements 11
Revision:Vendor

A vendor is any person (that "supplies" goods)

• Who is registered in terms of VAT , or 
• Supposed to be registered 
An Enterprise
• ALSO -unincorporated bodies :
• Public management 
• Municipality 
• Company, CC 
• Body of persons 
• Deceased or insolvent estate 
• Trust Fund 
• Foreign donor -funded project 
• ALSO-unincorporated bodies :
• Partnership 
• Married in community of property (also unincorporated like
partnership)
VENDOR-Administration

Vendor even if there are separate businesses as it is

the person who registers

EXCEPT
If every business in a company – Supplies > R1 million
Group companies to register - except a 8 (25)
Branches or divisions which
- Each branch or division has independent accounting system
- Each can be indepently identified iro nature of activities
BUT all taxable supplies have to added together to determine the
R1 million

EXCEPT - section 50 and 50A

If business deliberately split to avoid the R1 million
Commissioner may direct that only one person register as a vendor of
both / several businesses
If Commissioner is satisfied that a person is responsible
VENDOR-Administration

• EXCEPT FOR COMMERCIAL ACCOMMODATION: - also later

If the person is provided with commercial

accommodation
1- A value < R60 000 in any 12-month period
2- BUT: from 1 APRIL 2017 it’s R120 000
3- It is not an enterprise
May voluntarily register as> R120 000 in 12-month
period (therefore not deemed a vendor if supplies do
not exceed R120 000)

Commissioner may cancel the registration and give

written notice thereof - a 24 (5) & (7)
Vendor…

Income

Price R 100

+ OUTPUT TAX
R 15
15%

= R 115
15

Pay R 15 to SARS
 Fakulteit
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Admin – accounting basis

Admin: - Selfstudy

THE ACCOUNTING BASIS– S 15

1. Invoice basis – OR
2. Payments basis -
The time of supply depends on the accounting basis
Admin - INVOICE BASIS

VAT is recognised when:

Invoice is issued, or
Payment received
EXCEPT:
With real estate - when purchase price is received
EXCEPT - if it is a connected person

Most vendors register for this basis - if they do not

specifically apply for payments based they are
registered automatically
Example 1

• A VAT vendor applying the INVOICE

BASIS, supplied the following goods
(slides that follow)

• You are required to determine the time

of the above supplies for VAT purposes.

19
Example 1 – INVOICE BASIS

• (a)On 2 February goods were delivered at a

client’s premises and the invoice for the
goods was issued on the same date. The
payment for the goods was received on 31
March.

• (solution) As the invoice for the goods was

issued before payment was made, the time
of the supply is the date the invoice was
issued, which is 2 February. The date of
payment (31 March) is then irrelevant. 20
Example 1 – INVOICE BASIS

• (b)On 29 April a client paid R100 000 for

goods delivered on the same date. The
invoice was issued on 15 May.

• (solution) As the payment for the

goods was made before the issue of the
invoice, the time of supply for VAT
purposes is 29 April, when payment
was made. The date of delivery of the
goods is then irrelevant.
21
Admin - PAYMENTS BASIS

VAT is recognized when:

• Payments are made ​(purchases)
• Payments are received (sales)
Admin - PAYMENTS BASIS

The following businesses qualify for payments basis:

• A public authority;
• Water Board
• Municipality -
• municipal entity
• Association not for gain
• Foreign supplier of electricity services (2015)
• Regional Electricity Distributor – established after
6/30/2005
• Public entity in terms of Public Finance Management
Act Management
• An entity or subsidiary
• A company owned by municipalities
Requirements for payments basis

• Municipalities and SABC

• Natural Person
– < R 2.5m supplies (VAT exclusive) in 12 months
– Written request to SARS
• BUT for Natural person:
– If a specific supply > R 100 000 (VAT incl)
– Account on invoice basis for this supply
– Except for fixed property

• CC & Company cannot use payment basis 24

Example 2

• A vendor registered on the PAYMENTS

BASIS supplied the following goods:

(a) On 2 February goods are delivered at a

client’s premises and the invoice for R15 000
(inc VAT) for the goods was issued on the
same date. The payment for the goods was
received on 31 March.

(solution) The value of the supply is lower than25

R100 000 and the time of supply is the date
the payment is received – that is 31 March.
Example 2 – Payment basis

• (b)On 29 April a client paid R50 000 (inc

VAT) for goods delivered on the same
date. The invoice for the goods was
issued on 15 May.

• (solution) The value of the supply is

lower than R100 000 and the time of
supply is the date the payment is
received – that is 29 April.
26
Example 2 – Payment basis

(c) On 19 July trading stock is delivered at a client’s

premises and the invoice for R180 000 (inc VAT)
was issued on the same date. Payment for the
goods was only received on 31 August.

(solution) As the value of the supply exceeds

R100 000 (inc VAT), the time of supply is determined
by applying the time-of-supply rules for the invoice
basis and that is the earlier of payment or the date
the invoice is issued. The invoice is issued before
payment is made and the time of supply is therefore27
on the date the invoice is issued – that is 19 July.
Admin - PAYMENTS BASIS

• OTHER NON-SPECIFIC VENDORS: 
A natural person (other than a trustee) or 
Unincorporated body of persons of which all are individuals 

• As long as:
The total value of taxable supplies - for 12 months starting at
the beginning or ending at the end of a tax period-not likely
to exceed R2, 5 million(including VAT) could also be done vice
versa
EXCEPT: Delivery of R100 000 or more - since 1997

• If registered voluntarily – then vendor is on payments basis

until supplies exceed R50 000
 Fakulteit
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Admin – Tax periods

Tax periods (1.3.2)

Category A Two month periods,Ifending

not in another
uneven Category–
months
then within Cat A or
Category B B,depending
Two month periods, ending on what
even months
SARS indicates
Category C Monthly periods

If value of supplies for a 12 month period >R30 million

Vendor applied for this category; or
SARS classified vendor into this category as a result of default
Category D 6 monthly periods, ending Feb/Aug (unless SARS indicates other)

Farming (not Cat C) and value of supplies <R1,5m for 12 month

period
Category E Annual periods (ending on last day of YOA)

Administration companies
30
Admin - TAX PERIODS – S 27

A 2 Month Periods ending - Jan, March, May, etc.

B 2 Month Periods ending - February, April, June, etc.
A and B: for Taxable supplies <R30 million over 12 months Farmers TS>
R1, 5 million over 12 months
C 1 Month Periods
-Entrepreneurs with taxable supplies (TS)> R30 million -12 months
-Who applied for it in writing
Whom repeatedly-not fulfilled the VAT requirements
D 6 Month Periods - farmers TS R1.5 million in 12 months
E-12 Month Periods Company and trust funds
-Rental of property
-Administration or management of companies that is connected
-All connected persons
-Invoices only once a year issued
[F 4 Month Periods - Jun, Sep and Oct - Small businesses with turnover
of less R1.5million] only until 2015
Unless: business branches
Admin - TAX PERIODS

To determine the tax supplies for 12 months for

the purposes of the above.

Excludes:

-Supplies to cessation of business

-Delivery of capital assets
-Abnormal conditions
 Fakulteit
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Admin – returns and

payments
Returns and Payments (1.3.3)
Within 25 days* from end of vat period:

Payment method Return Payment

Cheque 25th 25th

Payment at any of four big banks 25th 25th

Debit order (return via eFiling) 25th 25th

Last business Last business

*Return and payment via eFiling
day day

EFTs (return via eFiling) 25th 25th

34
Payment of VAT

> R100 000 payments per cheque NOT :

At SARS branches or
Via mail

Cheque payments :
– Complete in full – South African Revenue Services
– Cross as “not negotiable/transferable”

Category C vendors – MUST submit and

pay electronically 35
Penalties and Interest

• If payment not at right date :

– 10% penalty on the taxes
– interest @ prescribed rates ( form 1st day of
month that follows payment month)

• May object and appeal

36
Refunds (2.3.5)

• Input tax > Output tax = Refund

• < R100 – carry over to next period – not

refunded

• SARS must refund the vendor within 21

business days from submission
– these 21 interest free day start from when all
required documents were submitted.
37
Example 3

A vendor carries on an enterprise and supplied

goods and services for R115 000 (including VAT of
R15 000) during a tax period.

You are required to calculate the VAT payable by or

refundable to the vendor if he paid the following
input tax on goods and services supplied to him
during the tax period:

a) R6 000

b) R15 000 38
Example 3

(a) (b)
R R

Output tax (R115 000 x 15/115)

15 000 15 000

Less: Input tax (6 000) (16 000)

VAT Payable 9 000 (1 000)

39
Admin - CHANGE OF BASIS

From Invoice to Payment Basis:

Inputs payable on credit balances
Outputs payable on debtors

From Payment basis to invoice:

Output - input
 Fakulteit
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Admin – time of supply

Time of supply– Sec 9
42

* NB – it determines in
which VAT period
* Rules applicable to both
INPUT and OUTPUT VAT
General Rule – earliest of
• Date of invoice or
• Date payment received by supplier
Time of supply– Sec 9
43

• Invoice =
– document
– notifies
– of an obligation
– to make a payment

• Date of delivery or
supply of service –
NO role in
determining time of
supply
Value of the supply – Sec 10

44

NB: Refer rule to value or

consideration???

General Rule – value of a supply is

• Amount of money ( if consideration is in
money) or
• Open market value of consideration (if
not in money)
• Less:
• VAT amount included in consideration
 Value of the supply – Sec 10
45

Value = amount VAT excluded = R100 000

Consideration = amount plus VAT R100 000 +

R15 000 = R115 000
 Fakulteit
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Admin – tax invoices

 2.18 TAX INVOICE

Issue within 21 days

Clearly mark copies – only ONE original

• < R50 – no tax invoice needed

• <R5 000 – abridged tax invoice (not for zero-
rated)
• > R5 000 (or zero rated) – complete tax invoice
 > R5 000 TAX INVOICE
48

• Full tax invoice

– the words “tax invoice” in a prominent place
– the name, address and VAT registration number of the
• supplier
• recipient (if the recipient is a vendor)
– an individual serialised number and the date on which the tax
invoice is issued
– a full and proper description of the goods or services supplied
– the quantity or volume of the goods or services supplied
– one of the following:
• Value of the supply, VAT levied and consideration ór
• Consideration AND ór VAT % Ór VAT
 < R5 000 TAX INVOICE
50

• Abriged tax invoice

– the words “tax invoice” in a prominent place
– the name, address and VAT registration number of the
• supplier
• recipient (if the recipient is a vendor)
– an individual serialised number and the date on which the tax
invoice is issued
– a full and proper description of the goods or services supplied
– the quantity or volume of the goods or services supplied
– one of the following:
• Value of the supply, VAT levied and consideration ór
• Consideration AND ór VAT % Ór VAT
Not for zero
rated
 Debit Notes
51

• VAT amount on tax invoice < Supposed to be

VAT Amount
• THUS – increase the VAT
• Ex .
– Nature of supply changes
– Consideration changes
– Change order
52
 Credit Note
53

• VAT amount on Tax Invoice > Correct VAT

Amount

• Only one original – if loses – make out a COPY

• THUS – decrease the VAT

– ie. discount,incentives
– Goods returned, cancelled supplies
54
 Fakulteit
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Admin – fines and interest

Payment of VAT

> R100 000 payments per cheque NOT :

At SARS branches or
Via mail

Cheque payments :
– Complete in full – South African Revenue Services
– Cross as “not negotiable/transferable”

Category C vendors – MUST submit and

pay electronically 56
Penalties and Interest

• If payment not at right date :

– 10% penalty on the taxes
– interest @ prescribed rates ( form 1st day of
month that follows payment month)

• May object and appeal

57
Refunds (2.3.5)

• Input tax > Output tax = Refund

• < R100 – carry over to next period – not

refunded

• SARS must refund the vendor within 21

business days from submission
– these 21 interest free day start from when all
required documents were submitted.
58
Example 3

A vendor carries on an enterprise and supplied

goods and services for R114 000 (including VAT of
R14 000) during a tax period.

You are required to calculate the VAT payable by or

refundable to the vendor if he paid the following
input tax on goods and services supplied to him
during the tax period:

a) R6 000

b) R15 000 59
Example 3

(a) (b)
R R

Output tax (R114 000 x 14/114)

14 000 14 000

Less: Input tax (6 000) (15 000)

VAT Payable 8 000 (1 000)

60
Admin - CHANGE OF BASIS

From Invoice to Payment Basis:

Inputs payable on credit balances
Outputs payable on debtors

From Payment basis to invoice:

Output - input
Admin - TAX RETURNS AND PAYMENTS-
Sec28

Return within 25 days after the end of the period

Unless the 25th is a Saturday, Sunday or public holiday then the last
business day before the 25th
VAT paid with this form
Unless it is a debitorder - then last business day
Unless it is efiling - then last business day

If thrown in box at SARS it should be before 15h00

Commissioner may determine and prescribe in what manner and date
Cheques> R100 000 must be made ​at a branch or paid by mail

No cheque > R100 000 if it is for more than one tax period
Check made out to: South African Revenue Services and crossed
Category C - month have electronic returns