25. SARS VAT Vendors Guide.pdf

Alternatively the vendor may reduce the output tax

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discount have been met. Alternatively, the vendor may reduce the output tax attributable for the tax period with the amount of the discount. Similarly, the vendor receiving the settlement discount must account for output tax in field 12 of the VAT201 return, or reduce the total amount of input tax deducted in the VAT return for the tax period in which the settlement discount is allowed. 9.5 Change in use or application 9.5.1 General A vendor must make an adjustment to output or input tax (as the case may be), if the extent to which capital goods or services used by the vendor to make taxable supplies increases or decreases, or goods or services are applied wholly for a different to the intended purpose when acquired, manufactured, assembled, constructed or produced. This includes stock items or capital assets taken from the business for own use, or for exempt or other non- taxable purposes. The term “adjusted cost” used in sections 1(1), 16(3)( h ), 18(2), (4) and (5) is for the purposes of calculating certain input and output tax adjustments required by, or allowed to, a vendor on any change of taxable use of assets. The effect is that any costs incurred in acquiring the assets which are not VAT inclusive (or deemed to include VAT) are excluded in the formula used to calculate the adjustment. Examples include finance charges (exempt) or labour charges by a non-vendor (no VAT chargeable), and salary and wages incurred in the manufacture, assembly, construction or production of those goods or services. An adjustment to output tax will be required where – goods or services acquired for making taxable supplies are subsequently applied wholly for private, exempt or other non-taxable purposes; or there is a decrease of more than 10% in the extent of taxable use or application by the vendor of capital goods or services which have an adjusted cost of R40 000 or more. an adjustment to input tax may be permitted where – goods or services applied wholly or partly for exempt or private purposes are subsequently applied wholly or partly for making taxable supplies; or 73
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VAT 404 – Guide for Vendors Chapter 9 there is an increase of more than 10% in the extent of taxable use or application by the vendor of the capital goods or services concerned. 9.5.2 Change in use from taxable to non-taxable purposes If you bought or imported any goods or services (including capital goods or services) for your business and deducted input tax, and later, applied the goods or services for your own use, for exempt supplies, or for other non-taxable purposes (that is wholly for another purpose), 91 you will have to pay output tax on the OMV of those goods or services. The adjustment must be made at the time that the goods or services are applied wholly for non-taxable purposes.
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