VAT _Pt 2
Time and Value of Supply
The Time of Supply is the earlier of the Invoice date or Payment date
The rules for Time and Value of Supply in VAT are set out in Sections 9 and 10, respectively.
The Value of Supply is
Unless the parties are connected persons, in which case it's when goods are removed/made available or when services are rendered
the consideration for the supply MINUS the VAT portion
A Tax invoice triggers the liability for output VAT, and possessions of a TAX invoice triggers the right to claim input VAT
Based on section 10(2) of the VAT Act
Value of Supply- Commercial Accommodation
Residential accommodation in a dwelling is exempt from VAT if supplied in terms of an agreement of lease, but commercial accommodation is subject to VAT
MEANING
If someone rents out a house, flat or apartment to someone as their place of residence under a lease agreement, they do not have to charge VAT on the rent
However if someone rents out a room, house, flat, or other type of accommodation to someone for commercial purposes such as hotel, motel, guest house or any other establishment, they are requied to charge VAT
Because Residential accomodation in a dwelling is exempt from VAT
This is because commercial accommodation is subject to VAT
Types of Commercial Accommodation
room
hotel
apartment
motel
inn
In any house
guest house
Lodging or board and lodging
together with domestic goods and services
boarding house
flat
residentual establishment
holiday accommodation unit
chalet
tent
caravan
camping site
houseboat
similar establishment that is regularly or systematically supplied
Lodging or board and lodging for the following are subject to VAT
children
physically or mentally handicapped persons
In a home for the aged
Hospice
Domestic goods and services subject to VAT with the supply of commercial accommodation include
A telephone, television set, radio, or similar article
Furniture and other fittings
electricity, gas, air conditioning, heating
meals
Cleaning and maintenance
Laundry
Nursing services
Water
When domestic goods and services are supplied at an all-inclusive charge for an unbroken period exceeding 28 days, the consideration for the supply is deemed to be 60% of the all-inclusive charge
If the supply of domestic goods and services(such as cleaning, meals, laundry, etc.) is provided for an unbroken period exceeding 28 days, the consideration (or the amount charged for the supply) is deemed to be 60% of the all-inclusive charge
This means that only 60% of the total charge will be subject to VAT
Zero Rating
About
If annual turnover is over R1 Million and they only make zero-rated supplies, they must register as a vendor
Despite the 0% Rate, input tax can still be claimed
Different from someone making exempt supplies, which VAT Input cannot be claimed
Basically the vendor is making taxable supplies, but at a rate of 0% and can claim VAT Input
Goods Zero-Rated
Taxable supplies subject to VAT at 0%
Leased or Chartered goods used exclusively in an export country
⭐Going concerns that are sold
Goods used in the repair or modification of certain goods
⭐Gold supplied to the SA Reserve Bank or a registered bank
Goods exported through the Export Incentive Scheme
Certain Agricultural goods
Exported Goods
⭐Certain types of fuel
⭐Basic Food Stuff
Compensation paid by republic authority under certain circumstances
Fixed property supplied to cabinet member in charge of land reform
Imported goods stored in a licensed warehouse not entered home for consumption
Services Zero-Rated
⭐Certain municipal rates and telecommunications services provided by international providers may also be zero-rated, subject to specific conditions
Section 11(2) of the VAT Act in South Africa provides a list of services that are zero-rated
⭐Insuring or arranging insurance for international trips
⭐Certain services related to the repair or maintenance of foreign-going ships or aircrafts
⭐Transport of passengers or goods between places outside of South Africa
⭐Certain services related to intellectual property for use outside of South Africa
⭐ Illuminating kerosene
⭐Services rendered outside South Africa
⭐Services rendered to a non-resident who is not a vendor
⭐Supplies to independent branches outside SA
Exempt Supplies
About
A person who only makes exempt supplies is not considered to be carrying on an enterprise and cannot register as a vendor
If a person is registered because they also make taxable supplies, they can only claim input tax deductions for their taxable supplies
Example
⭐Transportation by Rail/Road
If a transport business provides the service of transporting paying passengers and their belongings by road or railway, and the business operates the transport themselves, then that service is exempt from VAT.
⭐Letting of Res Accommodation/Land
⭐Educational Services
However, this exemption only applies if the transport service is provided as part of the business's usual activities and not as a one-time occurrence.
⭐Trade union subscriptions
The supply of residential accommodation in a dwelling, as well as the supply of a "right of occupation" to certain retired persons and the supply of lodging or board and lodging as a fringe benefit or hostel for employees
Education services are exempt from Value-Added Tax (VAT) in South Africa, provided they meet certain requirements
or tax-exempt Public Benefit Organizations (PBOs) offering adult basic education and training
vocational or technical education
Including being supplied by registered schools or colleges, public or private higher education institutions.
Or education and training for religious or social workers or persons with physical or mental impairments.
⭐A non-profit organization distributing certain goods that were donated to them.
⭐Goods that are duty-free and have not been cleared through customs for sale in South Africa
non-resident supplies the goods from outside South Africa, and the goods are imported into South Africa by the South African resident
In this case, the non-resident would not have to pay VAT on the sale of the goods to the South African resident.
the South African resident would be responsible for paying VAT on the importation of those goods
⭐The supply of crèche or after-school care for children
⭐The sale or letting of land outside the Republic
⭐Certain services provided by property managers.
housing developments for seniors
Home Owners Associations (HOAs).
managing properties like apartment buildings
Basically, the exemption means that property managers do not have to charge their clients VAT for these types of services
⭐Political parties and bargaining councils, can provide things to their members without having to pay taxes on them
Members pay for these things themselves through their membership fees.
⭐Financial Services
VAT is not charged on dividends received as they are not payment for any supply.
Financial service suppliers cannot register as VAT vendors, and VAT inputs must be apportioned between taxable and exempt supplies.
Examples of VAT-exempt financial services include currency exchange, payment or transfer of ownership of cheques, debts cession, interest charging and provision of credit, life insurance policies and subscriptions, pension fund contributions, and cryptocurrency exchange.
A tax court case held that a company administering funeral policies had to charge VAT on the share of the premium received for its services.
However Fees paid for arranging or consulting on financial services are not exempt from VAT.