Whether your business is registered as a Close Corporation, Sole Proprietorship or Private Company, there are various requirements you have to meet and one of these could be Value-Added Tax (VAT), which can benefit your company in that you’ll be able to claim VAT back on your expenses.
It’s mandatory for any business to register for VAT if the income earned in any consecutive twelve month period exceeded or is likely to exceed R1 million. Any business may choose to register voluntarily if the income earned, in the past twelve month period, exceeded R50 000. Although this will add to your administration workload, it can also benefit your company in that you’ll be able to claim VAT back on your expenses.
The difference between the VAT you paid and the VAT you’ve collected. You’ll pay/claim to/from the Receiver of Revenue according to the VAT cycles. VAT is levied on the value of the goods or services – whether by sale, rental agreement, installment credit agreement or any other forms of supply by the vendor that’s taxable.
To register for VAT, you need to complete a VAT101 form, which if you operate more than one business under one entity, you must only register once. Once you’ve registered, SARS will let you know in writing what your registration details are, the date on which it took effect and the tax period allocated to you.
VAT is charged at the current rate of 14%. And you have to make use of a valid ‘Tax Invoice’.
Expenses that you can claim VAT on include: Going out for a meal with a client out of town on business for a period longer than one night or for refreshments purchased for the delegates that you’re training.
Hiring a car for business purposes claim the VAT on the insurance that you’re required to take out on the vehicle.
Should one of your staff fall ill or get hurt in an accident whilst they’re at work and the medical expenses are paid by the company, the VAT on these medical bills can also be claimed back.
Parking fees for parking in the malls and in office park complexes claim by submitting those receipts from pay machines.
Claim the VAT back on wreaths or flowers sent to staff or customers who’ve had a death or bereavement in their families. Even postage stamps and postage being used for business purposes, and also carpets, paintings, pictures and plants purchased for the office and also physically in the office.
