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VAT Pt 3 - Coggle Diagram

- - - - :star:On the Payment Basis, VAT is accounted for when
        
        1.) When the vendor receives payment for a supply made by them
        
        2.) Or makes payment in respect of a supply made to them
      - The Payments basis is available to
        
        public water boards
        
        certain municipal entities
        
        public authorities
        
        municipalities
        
        associations not for gain
        
        foreign suppliers of electronic services into South Africa (or intermediaries)
        
        natural persons
        
        unincorporated bodies of natural persons
        
        as long as their total taxable supplies do not exceed R2.5 million per annum (excluding VAT).
      - if a vendor on the payments basis makes a supply worth R100,000 or more, they must use the invoice basis to account for the output tax.
    - - Organisation that must always account for VAT on the invoice basis.
        
        Trusts
        
        Close Corporations
        
        Companies
        
        Other Legal Entities
      - :star:On the Invoice Basis, VAT is recognized on whichever one is earlier here
        
        1.) When the invoice is issued
        
        2.) When payment is made
      - Vendors on the Invoice Basis must Recognize Output Tax even if the Debtor takes a long time to pay
        
        Leading to Cash Flow problems for certain Businesses.
      - A vendor can apply to use the payments basis instead of the invoice basis
        
        The change in VAT basis is applied for in a VAT117 form
      - Vendors that are permitted to register in terms of Govt. Notice No. R.447 must start out on a payments basis and switch to an invoice basis when taxable supplies exceed R50,000.
- - - - Gym Memberships
      - Retirement Plans
      - Health Insurance
      - Tuition Assistance
      - Company Cars
    - - Value can be either the actual cost to the employer or a cash equivalent determined by the tax authorities.
    - - Which is the :star:fringe benefit value Multiplied by 15/115.
        
        Calculated according to the Seventh Schedule to the Income Tax Act, which provides guidance on how to :star:value different types of benefits such as
        
        The use of a company car
        
        Free housing provided to an employee
        
        Note!!
        
        Before the 2019 Amendment
        
        :star:The Fringe Benefit Value Excluded VAT
        
        Therefore VAT was calculated as 15/100
        
        After the 2019 Amendment
        
        :star:The Fringe Benefit Value Includes VAT
        
        Therefore VAT is calculated as 15/115
    - - Exempt
      - Zero-Rated
      - Tax-Free
      - Or is for the supply of food, accommodation or entertainment
        
        where the employer would have been denied a VAT input.
    - - The value of the consideration for a motor car is deemed to be 0.3% per month of the determined value, while for other vehicles it is 0.6% per month of the determined value.
        
        Example
        
        Let's say that an employer provides an employee with the use of a company car as a fringe benefit. The determined value of the car is R400,000. According to the VAT rules, the deemed value of the fringe benefit for VAT purposes is 0.3% of the determined value per month.
        
        So, the employer would need to pay output VAT of R156.52 per month on the use of the company car as a fringe benefit for the employee.
        
        So, the deemed value of the fringe benefit for VAT purposes would be calculated as follows:
        
        0.3% x R400,000 = R1,200 per month
        
        This means that the employer would need to account for VAT on R1,200 per month, which would be calculated as follows:
        
        R1,200 x 15/115 = R156.52
      - Output tax is charged for a fringe benefit related to the use of a company car or vehicle.
        
        The value of the fringe benefit for VAT purposes is determined according to Section 10(13).
        
        For a motor vehicle, the VAT fraction of 15/115 is applied to the consideration set out in the Government Gazette.
      - If the employee has the obligation to maintain the vehicle, the consideration for the deemed supply is reduced by the lesser of R85 per month or the deemed consideration.
        
        Example
        
        However, if the employee has the obligation to maintain the vehicle, the deemed consideration would be reduced by the lesser of R85 per month or the deemed consideration of R600 per month. Therefore, the reduced deemed consideration would be R515 per month (R600 - R85).
        
        In this case, the output VAT payable by the employer would be calculated as the deemed output, which is the reduced fringe benefit value multiplied by 15/115. If the employer is registered for VAT, they would need to charge and collect the output VAT from the employee, and declare and pay it over to SARS.
        
        let's say the determined value of a vehicle is R200,000, and the VAT fraction of 15/115 is applied to calculate the fringe benefit value. If the vehicle is a "motor car" the deemed consideration for the fringe benefit is 0.3% per month, which is R600 per month.
        
        (i.e., no VAT input can be claimed)
      - Maintenance cost is not claimable by the employer if the employee has the obligation to maintain the vehicle.
      - If the employer pays the maintenance cost and recovers it from the employee, no VAT is accounted for on either the cost or the recovery of the cost as far as the employer is concerned.
  - - - Indemnity payment (a payment to compensate for a loss)
      - The insurer can claim a notional VAT input on the claim paid