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Tax invoices, credit and debit notes – time limits are set

Author: Carmen Moss-Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech relating to the time frame where debit or credit notes under s21(1) of the Value-Added Tax Act, No 89 of 1991 (VAT Act) are required to be issued. Background Under s16(2) of the VAT Act, a vendor can only claim an input deduction if he is in possession of a tax invoice or debit note or credit note. A ‘tax invoice’ is a document that needs to meet the requirements of s20(4) and s20(5) of the Act for the vendor to claim an input deduction. An ‘invoice’ on the other hand is a ‘document notifying an obligation to make payment’ and the issuing of which may affect the timing of supply.

VAT – Going concerns are going – no more uncertainty promised

Author: Carmen Moss Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech which seeks to clarify Interpretation Note 57 on the VAT treatment of a going concern, specifically the requirement that a vendor must be a registered vendor at the time the sale agreement is concluded. Background The sale of a business as a going concern, in simple terms, means that the business (or part thereof) is capable of being operated as a stand-alone business in its own right. An example of such a sale would be where a purchaser conducts a letting enterprise from a property and has decided to exercise an option to acquire the property from the seller in terms of the lease agreement, or in the case of a property developer’s enterprise, the transfer of its developed and undeveloped properties (essentially constituting trading stock) to a third party.

VAT – where to lodge objection – Tax Court or High Court?

The Pretoria Tax Court made an interesting ruling in ITC No 1866 [2013] 75 SATC 268. Section 32(1) of the Value-Added Tax Act No. 89 of 1991 (the VAT Act) states that the following decisions of the South African Revenue Service (SARS) are subject to objection and appeal, namely: In terms of section 23(7) of the VAT Act notifying that person of SARS’s refusal to register that person in terms of the VAT Act. In terms of section 24(6) or (7) of the VAT Act notifying a person of SARS’s decision to cancel, or refusal to cancel his registration in terms of the VAT Act.

Tax Administration Act – Criminal investigation in relation to a serious tax offence

The Tax Administration Act, No. 28 of 2011 (the TAA) took effect on 1 October 2012. In light of SARS’s strong emphasis on compliance, this article considers the procedures SARS should follow where it believes that a serious tax offence might have been committed. A “serious tax offence” is defined as “a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act, 1991 (Act No. 101 of 1991).”

On-charges and supplies subject to VAT

For a transaction in South Africa to attract Value-added Tax (VAT), there should be a supply of goods or services by a vendor in the course or furtherance of an enterprise. Consider the following scenario: A and B, both vendors for VAT purposes, have a business arrangement whereby, for example, B provides consulting and management services to A. It transpires, in the course of their business arrangement, that A requires the use of a rented vehicle. B agrees to arrange the vehicle. B enters into a rental agreement with C, also a VAT vendor, and the vehicle is made available for the benefit of A. C subsequently invoices B for R100 plus VAT of R14 and B pays C the R114.

Income Tax and VAT consequences of E-Tolls

Introduction The levying of tolls for the use of certain highways in Gauteng, the so called e-tolls, took effect on 3 December 2013.   It is therefore appropriate to consider the income tax consequences arising from the payment of e-tolls in those cases where an employee is reimbursed for business travelling or is provided with a vehicle owned by their employer or where an employee receives a travelling allowance to finance the expenditure incurred whilst travelling on the employer’s business.

VAT Alert – Homeowners Associations to deregister for VAT

In the past Home Owners Associations (HOAs) were not exempted from VAT and had to charge VAT on their levies, whereas sectional title body corporates were generally exempt from VAT. SARS is now of the view that the supply of services by an HOA to its members is not a business enterprise but merely a cost sharing arrangement and the law was amended accordingly.  As from 1 April 2014 the levies payable by members to HOAs will also be exempt from VAT. However, the effect of this amendment is that many HOAs will have to deregister for VAT purposes as from 1 April 2014 which will have certain financial and administrative implications.

VAT – Supply of services for contingent consideration

The recent Taxation Laws Amendment Act_ 2013 (TLAA), proposed a new section dealing with time of supply rules for contingent services. The proposed section 9(4)(b) of the Value Added Tax Act, No 89 of 1991 (the VAT Act) provides that “where services are supplied under an agreement and the consideration for such services supplied in whole or part is not determined at the time that such services are rendered or performed,

VAT – Fixed property acquired from non-vendor

Although old news to some, there still seems to be little awareness regarding the interplay between value-added tax (VAT) and transfer duty, and the benefits stemming from the ‘not so recent’ amendments to the Value-Added Tax Act No. 89 of 1991 (the Act), as applicable to fixed property acquired by a VAT vendor from a non-vendor on or after 10 January 2012.