2. Agencias internacionales de noticias
2.1 Historia de las agencias internacionales de prensa
Assuming that the vendor used an apportionment percentage of 72% during the year for all tax periods (based on the 2013 financial statements), the vendor would be entitled to claim an input tax adjustment in block 18 of the VAT201 return for the shortfall of 3% calculated as follows: R42 420 × 3% = R1 272,60.
Similarly, had the 2013 financial statements indicated the percentage to be 80%, the vendor would be required to make an output tax adjustment in block 12 of the VAT201 return as follows: R42 420 × 5% = R2 121.
VAT 404 – Guide for Vendors Chapter 8
• Beverages, meals, entertainment shows, amusements or other hospitality supplied to customers and clients at product launches and promotional events; and
• Capital goods such as hospitality boxes, holiday houses, yachts and private aircraft. Exceptions:
In the following circumstances, input tax relating to entertainment expenses incurred may be deducted:
• Vendors in the business of supplying entertainment – the entertainment must, however, be supplied at a charge that at least covers all the costs of supplying the entertainment or such charge must be equal to the open market value of the entertainment. This would include genuine client promotions where the entertainment is of the same sort as that normally provided (for example, two milkshakes for the price of one).
• Personal subsistence – only if the entertainment is acquired by the vendor and relates to a meal, refreshment or accommodation consumed or enjoyed by the vendor or his employee in carrying out the vendor’s business, in respect of any night that the vendor or employee must be away on business from his/her normal place of work and residence. No input tax credit is allowed in respect of an allowance paid to the employee to cover such expenses.
• Meals or refreshments supplied by organisers of seminars and similar events where the cost is included in the price of the ticket or entrance fee.
• Entertainment provided by operators of taxable passenger transport services to passengers or crew during the journey in which such entertainment is supplied as part of the taxable transport service to passengers, or as part of the subsistence of crew.
• Sport or recreational facilities provided by municipalities.
• Expenses incurred by a welfare organisation in carrying on “welfare activities”.
Refer to theVAT 411 – Guide for Entertainment, Accommodation and Catering which deals with this topic in detail.
8.5.2 Club subscriptions of a recreational nature
Input tax may not be deducted on VAT paid in respect of any membership fees to sporting, recreational and private clubs. For example, membership of a country club, soccer supporters club, amateur boxing club, holiday club, tea club, stokvel savings club etc. However, the VAT incurred on subscriptions to magazines and trade journals which are related in a direct manner to the nature of the enterprise carried on by the vendor may be deducted as input tax. The VAT on any fees or subscriptions to professional organisations paid by a vendor on behalf of its employees, may not be deducted as input tax. However, if the vendor is a sole proprietor, and such fees or subscriptions relate to the sole proprietor, and is consumed in the course of the sole proprietor’s enterprise, the VAT incurred in this regard may be deducted as input tax.
8.5.3 Motor cars
The term “motor car” is defined in the VAT Act and includes vehicles which –
• have three or more wheels;
• are normally used on public roads; and
• are constructed or converted mainly or wholly for carrying passengers.
As a general rule, an input tax deduction may not be made by a vendor if a vehicle falling within the definition of a “motor car” is acquired, even if it is used in the course of making taxable supplies and regardless of the mode of acquisition. For example, the motor car could be acquired by way of outright purchase, importation, ICA, operating rental agreement or casual hire.
The subsequent sale of such motor car by the vendor is not seen as a supply in the course or furtherance of an enterprise,60 and therefore the vendor is not required to account for output tax. This compensates for the disallowance of the input tax deduction on the acquisition of a “motor car”. Input tax may be deducted on the acquisition of any vehicle which does not fall within the definition of a “motor car”, provided that it is used for taxable supplies.
The term “motor car” includes the following vehicles (that is, input tax will generally be denied):
• Double cab bakkies (LDVs).
• Ordinary sedan type passenger vehicles.
• Station wagons.
• Minibuses.
• Sport utility vehicles (SUVs).
The term “motor car” excludes the following vehicles:
• Goods transportation trucks.
• Single cab light and heavy delivery vehicles.
• Motor cycles.
• Caravans.
• Ambulances, game viewing vehicles and hearses.
• Vehicles capable of accommodating more than 16 persons (for example, a bus).
• Vehicles with an unladen mass of 3 500 kg or more.
• Special purpose vehicles constructed for purposes other than the carrying of passengers.
• Equipment such as bulldozers, graders, hysters, harvesters and tractors.
Hearses and game viewing vehicles are specifically excluded from the definition of “motor car”, as these vehicles are generally not used for private purposes, but are applied exclusively in a particular type of business (that is, game viewing vehicles for game viewing, and hearses for the transport of deceased persons). Input tax on the acquisition of hearses and game viewing vehicles may be deducted where the vehicle is used exclusively for making taxable supplies. A vendor is also entitled to an input tax deduction on the acquisition of a motor car if it is acquired for the purpose of or permanently converted into a game viewing vehicle or hearse if that type of vehicle is required for use in the enterprise. (For example, an enterprise that supplies funeral or game viewing services.) In such cases the vendor will be liable for output tax on the subsequent supply (sale) of the vehicle.
The VAT incurred on repairs, maintenance and the general running costs of a motor car such as insurance, tyres, engine oil and servicing may, however, be deducted as input tax if the vehicle is used exclusively in the course of making taxable supplies. This could also include modification and installation costs incurred after the acquisition of the motor car61 (for example, canopy modification or installation of a built in toolbox for a bakkie). Remember that
In these types of situations, the vendor’s circumstances do not alter the fact that the double cab LDV still falls within the definition of “motor car” and that the input tax is still denied, even if it can be argued that the motor car is used for enterprise purposes. Only in the case of motor car dealers or car rental enterprises is an exception made regarding the ability to deduct input tax, as it is the nature of these enterprises to supply motor cars on a continuous or regular basis.
Refer to Interpretation Note 82 dated 25 March 2015 “Input Tax on Motor Cars” on the SARS website
for more information.
60
Section 8(14)(a). 61
VAT incurred on modifications made prior to the supply of the motor car cannot be deducted as input tax as it is considered to form part of the original acquisition of the motor car.
VAT 404 – Guide for Vendors Chapter 8 8.5.4 Medical schemes and benefit funds
Normally medical and other benefit schemes are not registered for VAT insofar as they provide medical or related benefits to their members. Consequently, input tax may not be deducted by these schemes in connection with any supply of goods or services to members, or in respect of any payment or request for reimbursement of expenses incurred by members covered under the scheme in respect of medical and dental services.
8.6
PETTY CASH PAYMENTS
Vendors are not obliged to obtain tax invoices for purchases not exceeding R50. These are usually expenses which are paid from petty cash for small items such as postage stamps, stationery, parking etc. Even though it is often the case that no tax invoice is required for petty cash purposes, you will need to keep the till slip, cash slip or sales docket with details of the purchase in a petty cash book or similar record in order to deduct the input tax. Make sure that the receipt indicates the amount of VAT charged, or alternatively, a statement that the amount charged includes VAT at the standard rate, otherwise any deduction in this regard will be disallowed.
8.7
PRE-INCORPORATION EXPENSES
Pre-incorporation expenses are costs which are incurred by a person in registering and setting up the infrastructure of a legal entity such as a company before the entity can legally be viewed as having come into existence, that is, a company which is not yet registered with the Companies and Intellectual Property Commission (CIPC).62
A company that reimburses a person for the costs and purchases incurred before it was formed is deemed to be the recipient of the goods or services and to have paid any VAT component. Accordingly the company can deduct that VAT as input tax in the tax period during which the reimbursement is made.
This will only be allowed if the person –
• was reimbursed by the company for the whole amount paid; and
• acquired the goods or services for the purpose of an enterprise to be carried on by the company and has not used the goods or services for any other purpose.
Input tax may not be deducted by the company where –
• the supply of the goods or services by the person to the company is a taxable supply, or is a supply of second-hand goods (not being a taxable supply);
• the goods or services were acquired more than six months before the date of incorporation; or
• the company does not hold sufficient records.
8.8
ADJUSTMENTS
In the course of trading, it may be necessary for a vendor to make certain adjustments, for example, if bad debts are written off, or there is a change in the extent of taxable use of assets. These adjustments may affect the input tax or output tax. Refer to Chapter 15 for more details.