Why you should keep your receipts ahead of the VAT change

One of the biggest changes in finance minister Malusi Gigaba’s recent budget speech was the proposed increase of the VAT rate to 15%.

While the rate is still subject to final parliamentary approval, it is expected to come into effect from 1 April 2018.

Despite the increase being the first in over two decades, the VAT Act currently contains a number of rules which cater for an increase in the VAT rate.

These rules cover, for example, what happens when contracts have been entered into before the VAT rate is increased, where no invoice has yet been issued or payment received.

They also explain why its important to actively track and issue receipts when these transactions are made, to ensure that the correct VAT rate is applied.

Di Hurworth, director of Value Added Tax at KPMG South Africa, broke down exactly how these rules will work when the VAT rate changes in April:

Should goods have been provided before 1 April, or services performed before 1 April, then the current VAT rate (14%), not the new VAT rate of 15%, will apply.

Should goods be provided on a periodic basis or services be performed over a period which falls before and after the effective date of 1 April, then an apportionment must be made on a fair and reasonable basis and the 14% VAT rate will apply to the portion before 1 April 2018, and the VAT rate of 15% will apply on the portion of the supply of goods or services from 1 April 2018.

Specific rules relate to the sale of fixed property.

Hurworth said that there were also special considerations where the time of supply (invoice or payment) falls within the period from the date the minister announces the increase in the VAT rate (21 February 2018) and ending on 1 April 2018.

“If the goods will be provided more than 21 days after 1 April, or the services will be performed after 1 April, the new VAT rate should be charged on the supply of goods or services – i.e. 15%,” she said.

“However, there are certain exceptions to this. This rule therefore prevents invoices being raised before 1 April where goods will be supplied more than 21 days after the effective date.”

Source: Supermarket & Retailer

Tags: , , , ,

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top