Accounting and Tax Club.co.za Q&A
Are you spending TOO MUCH on accounting costs?

REVEALED: The secret to reducing your audit fees…

Click here
 

"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

Kallie Van Der Merwe
 Expert Kallie Van Der Merwe answered question on 18 Jun. 2013
Vote answer I appreciate this answer [0] I am unhappy with this answer [0]
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
  • Accounting
  • Allowances and deductions
  • Audit/Assessment
  • Capital gains tax
  • Dividends
  • Donations Tax
  • Exports and imports
  • Fringe benefits
  • Input tax
  • Provisional tax
  • Sars
  • Tax basics
  • Tax invoices
  • Tax returns
  • Vat basics
  • Vat registrations
  • Vat return
Premium Services
  • Company Registration
  • Objections
  • PAYE
  • Trusts
  • Turnover Tax
  • UIF
  • Wear and Tear
TOP ANSWERS 2017
Does a "buy back of shares" triggers dividend withholdings tax? Company wants to buy back, no-par value shares for R500...[read more]
Published on 31 May. 2017 1 answer
When a south african company invoices an United Kingdom company, will there be VAT payable ?[read more]
Published on 19 Jun. 2017 1 answer
We have a debit intergrouploan (+/- R450 000.00) in the Company (O) originating from company (C) (one director have...[read more]
Published on 05 May. 2017 1 answer
My client is a registered VAT vendor. Selling a single cab bakkie. We could not claim VAT on the purchase as it was...[read more]
Published on 22 May. 2017 1 answer
I have a client who is renting out rooms in their home. They are also still living in the specific house. How do you...[read more]
Published on 24 May. 2017 1 answer
When customer makes payment to United Kingdom invoice, will the full invoice amount be paid? Or, there will be a...[read more]
Published on 19 Jun. 2017 1 answer
Video Archive Video club

Your library of Free eReports
View full library
SARS Tax Tables 2016/2017 Download


Simply click download for your FREE SARS Tax Tables 2016/2017 to ensure you calculate your tax correctly.