Accounting and Tax Club.co.za Q&A
Stop forking over thousands of unnecessary cash to SARS!

Be one of the first in the country to get access to the information that’ll make sure you pay the least tax possible...

"CASH BASIS vs INVOICE BASIS"

My client - sole proprietor's turnover is under R5mil. can she declare her income on the cash basis? Do I have to register her as cash basis or can we accept that she's on a cash basis. She is a industrial psychologist - writing reports for the road accident fund - these cases can take up to 9 months before she receives her money.

Added to
  • Vat basics
  • Voluntary vat registration

MERTZ
 User  MERTZ asked on 12 Jun. 2013

 

1 answer

Vote answer I appreciate this answer [0] I am unhappy with this answer [0]
Kallie01
 Expert Kallie01 answered question on 18 Jun. 2013
Section 15 of the VAT Act provides the default position with regard accounting of VAT and provides that every vendor shall account for VAT on the invoice basis unless provided otherwise.

A vendor must apply in writing to SARS before being allowed to apply the payments basis (i.e. the cash basis), which, if approved, will only apply from a future tax period as specified by SARS. (Section 15(2) refers).

In terms of section 15(2)(b) of the VAT Act, the payments basis is only available to vendors who are natural persons (or partnerships consisting only of natural persons) whose total taxable supplies at the end of a tax period have not exceeded R2.5 million in the previous 12 months, and are not likely to exceed R2.5 million in the next 12 months. The payment basis is also available to certain other entities, none of which are relevant in this instance.

If the vendor is already registered on the invoice basis, and assuming she qualiies to be registered on the payment basis, the vendor can apply to change the basis of accounting by completing form VAT 117 (available from the SARS website www.sars.gov.za).

If your client’s total taxable income exceeds R2.5 million in a 12 month period, she will not be entitled to account for VAT on the payments basis.



Other questions about Vat basics

 


RSS Facebook Share the experience
Accounting and Tax Club.co.za
Topics
  • Accommodation
  • Accountant
  • Accounting
  • Allowances and deductions
  • Audit/Assessment
  • Bookkeeper
  • Budget Speech 2014
  • Budget Speech 2015
  • Capital gains tax
  • Company cars
  • Depreciation
  • Dividends
  • Donations Tax
  • Employee taxes
  • Employment Tax Incentive Act
  • Exports and imports
  • Financial Manager
  • Fringe benefits
  • Input tax
  • IT14SD form
  • Medical expenses
  • MOI
  • Provisional tax
  • Sars
  • Tax basics
  • Tax invoices
  • Tax returns
  • Travel allowances
  • Vat basics
  • Vat refunds
  • Vat registrations
  • Vat return
Premium Services
  • PAYE
  • Turnover Tax
  • UIF
Our experts
KCRottok
ochanyau Natalie Gerhard01 Philip David01 Dee01
TOP ANSWERS 2015
Hi, I am a new business owner and with the tax season approaching I wanted to ask how I can claim input tax on my...[read more]
Published on 27 May. 2015 1 answer
I spent money on a computer to run my sales department .Can i deduct the full amount to reduce my taxable income?[read more]
Published on 28 Apr. 2015 1 answer
Does any part of the remuneration structuring rely on 'reimbursive' payments or allowances?[read more]
Published on 02 Jun. 2015 1 answer
Staff earn 1. Basic salary 2. Company medical allowance. 3. Pension contribution. Do i calculate uif on all?[read more]
Published on 18 May. 2015 2 answers
Hello, What is a zero-rated supply?[read more]
Published on 23 Jun. 2015 1 answer
When will I be liable to register my partnership for Vat[read more]
Published on 24 Apr. 2015 1 answer
Video Archive Video club

 
Get your free 2015 tax tables report

And ensure you calculate your tax correctly.

Simply sign up to the Tax Bulletin to get your FREE 2015/2016 Tax Tables report.