5 Tips about the increased VAT rate
- According to the date the goods are actually delivered or made available for collection. While prices advertised are deemed to include VAT, SARS says they understand that some vendors may have difficulty changing systems and things. Vendors will be allowed to advertise or mark their prices as excluding VAT, BUT must display signs in prominent places that this is the case. They are allowed to do this till the 31st May 2018.
- If you submit 2 monthly VAT returns and your VAT return covers the March/April tax period, SARS says they will produce a VAT return that sees to this problem. They don’t say yet how it will look, just that more information will be communicated.
- You may not claim 15% VAT on expenses or purchases on which 14% VAT has been charged! Remember to check your tax invoices from your suppliers to ensure they have charged you the correct rate of VAT!
- If your supplier charges you 14% VAT after 1 April 2018, then you are only entitled to claim the 14% and not recalculate and claim 15%. So ensure your suppliers get it right!
- You MAY adjust your prices to cover the VAT increase, but SARS doesn’t say that you must!
10 Tips about the time of supply rule and what VAT rate to charge, and when
- If you are registered on the payments basis, the VAT rate to use is that which was applicable at the original time of supply.
- If you have entered a contract before 1 April 2018, the supplier may increase the contract price to recover the additional VAT.
- Where there are periodic or continuous supplies, such as rentals of property or equipment, on-going contracts for maintenance or insurance or subscriptions, the rate of VAT applicable is the rate which is in force at the time the payments are made. For example, our short-term insurance premiums will have VAT at 14% charged on them till31 March 2018 but from 1 April 2018, VAT at 15% will be charged on them.
- VAT on fixed property transactions will be the rate that applies on the date of registration of transfer of the property in the Deeds Office or the date that any payment of the purchase price is made – whichever happens first. If you buy a property before the 1stApril 2018 and
– VAT is charged at 14%; and
– the seller allows you to pay it off; and
– the payments will extend to after 1 April 2018, then VAT is still 14%!
- If you signed a contract to buy a residential property from a developer before 1 April 2018 but the property will only be transferred after 1 April, then VAT is still 14%.
- If a transaction was entered into before 1 April 2018 but goods will only be delivered after that date, then VAT will be charged at the rate applicable at the time of delivery
- If you perform services (or deliver goods) before 1 April 2018 but invoice after that date then VAT at 14% must be charged.
- If you issued a quote before 1 April 2018 and the customer accepted it, you are allowed to increase the price to make provision for the new VAT rate.
- If you’re claiming vat on bad debts after 1 April 2018, you must use the VAT rate that was charged at the time the invoice was issued.
- VAT on municipal bills: if your municipal bill is issued after 1 April 2018 for services relating to March 2018, then VAT must be charged at 14%. SARS says municipalities must take care! But you better check up on them, too.
But what if an invoice is issued (or received) between 21 February 2018 and 31 March 2018, and the goods are delivered or services performed on or after 1 April 2018? how do you apply VAT then?
My 1 day VAT Update Seminar will be on 14 March 2018 in Pretoria, where we will not only discuss these rules but touch on a few other sensitive VAT issues, like where your VAT refund is and how to get it, and the ever present dispute issue. So check out my website for bookings. There’s early bird prices too!
Until next time,