Still struggling to grasp when you can claim input tax? Follow these six rules

43984, 26 Nov. 2014

Tags: sars, input tax, claiming input tax, when to claim input tax

If you’re still struggling to grasp when you can claim input tax, you’re not alone.
Many Vat vendors battle.
While knowing you’re not alone in your struggle might be comforting, it doesn’t mean things have to remain the same.
And this is where we come in.
Today, we reveal six rules you must follow when it comes to claiming input tax so you can boost your company’s cash flow legally.
You won’t go wrong with your input tax claims if you follow these six rules
Input tax rule 1: You must have a valid tax invoice for the transaction or a bill of entry for an import.
With SARS, proof is everything. If you can’t back up your claims with the right documents, SARS will deny them.
Input tax rule 2: You can claim input tax on any item or expense you use in the course of your Vat-registered business. This means your supplier must have charged Vat on the transaction.
Input tax rule 3: You can claim input tax on second-hand goods you buy for your business – this is notional input tax.
To ensure SARS approves your claim, keep a record of the details of the person who sold the goods to you, a description of the goods and the amount you paid for them.
Here, you must use the Vat 264 declaration form instead of a tax invoice.
Input tax rule 4: You can’t claim input tax on certain expenses and purchases.
These are:
  • Expenses that relate to entertainment (unless away on business);
  • The purchase of a motor car (unless you’re a dealer);
  • Social and sports club subscriptions;
  • Expenses that relate to exempt supplies; and
  • Private or personal expenses like, repairs to your wife and children’s cars, holidays airfares, computers for private use etc.
Input tax rule 5: If you only render zero-rated supplies, (for example, you sell fresh fruit and vegetables) you can claim input tax on your business expenses.
Some of the business expenses you can claim on include rent, telephone and electricity.
Input tax rule 6: You can claim input tax on invoices you forgot about.
If, for example, you discover you haven’t claimed Vat back on some back invoices, you can make your claim, but it must be within five years of the date of the invoice.
We hope knowing these rules will make it a little easier for you to grasp when you can claim input tax so you can boost your company’s cash flow in a legal manner.

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