Category: Value-Added Tax Act No. 89 of 1991

“Temporarily applied” definition of section 18D of VAT Act

Posted on by admin_kmos

(b)     “temporarily applied” means the application of fixed property or a portion of a fixed property in supplying accommodation in a dwelling under an agreement or more than one agreement for letting and hiring thereof which agreement or agreements relate to a combined total period not exceeding 12 months: Provided that “temporarily applied” does not include the application of fixed property in supplying accommodation in a dwelling under an agreement for the letting and hiring thereof where any such agreement is for a fixed period exceeding 12 months, in which case this section will not apply, but the provisions of section 18(1) shall apply.

(2)     Notwithstanding the provisions of section 18(1), where goods being supplied consist of fixed property consisting of any dwelling and such fixed property—

(a)     is developed by a vendor who is a developer wholly for the purpose of making taxable supplies or is held or applied for that purpose by that vendor; and

(b)     is subsequently temporarily applied by that vendor in accordance with section 12(c),

such fixed property shall be deemed to have been supplied by that vendor by way of a taxable supply for the consideration contemplated in section 10(29) and shall take place in accordance with section 9(13).

(3)     Where a vendor who is a developer subsequently supplies fixed property contemplated in subsection (2)(b) by way of a sale within the period that the fixed property is temporarily applied, such supply shall be a taxable supply in the course or furtherance of the vendor’s enterprise and shall take place in accordance with section 9(3)(d).

(4)     Where fixed property contemplated in subsection (3) is supplied by that vendor, the supply shall be deemed to be made for a consideration as contemplated in section 10(2).

(5)      Where fixed property-

(a)     contemplated in subsection (3) is supplied by that vendor within the “temporarily applied” period; or

[Paragraph (a) substituted by section 50(1)(a) of Act 17 of 2023 effective on 1 April, 2024]

(b)     is temporarily applied as contemplated in subsection (2)(b) and is no longer applied in supplying accommodation in a dwelling immediately after the expiry of the “temporarily applied” period;

[Paragraph (b) substituted by section 50(1)(b) of Act 17 of 2023 effective on 1 April, 2024]

(c)     . . . . . .

[Paragraph (c) substituted by section 30(1) of Act 20 of 2022 and deleted by section 50(1)(c) of Act 17 of 2023 effective on 1 April, 2024]

the Commissioner shall allow such vendor a deduction in terms of section 16(3)(o), and the deduction so made shall be deemed for the purpose of that section to be input tax.

(6)     The fixed property contemplated in subsection (2)(b) shall be deemed to have been supplied by the developer by way of a taxable supply under section 18(1) for a consideration as contemplated in section 10(7) in the course or furtherance of that vendor’s enterprise at the earlier of-

(a)     the time that the temporary letting period of 12 months has been exceeded; or

(b)     the time that the vendor applies that fixed property permanently for a purpose other than that of making taxable supplies:

Provided that this provision shall not apply if, during the period that the property is “temporarily applied”, a written agreement for the taxable supply of the property has been concluded and the transfer of that property only occurs after the expiry of the said period. In such a case, the sale of the property concerned will be a taxable supply at the time contemplated in section 9(3)(d).

[Subsection (6) added by section 50(1)(d) of Act 17 of 2023 effective on 1 April, 2024]

[Section 18D inserted by section 54(1) of Act 20 of 2021 effective on 1 April, 2022]

“Developer” definition of section 18D of VAT Act

Posted on by admin_kmos

(1)    For the purposes of this section-

(a)    “developer” means a vendor who continuously or regularly constructs, extends or substantially improves fixed property consisting of any dwelling or continuously or regularly constructs, extends or substantially improves parts of that fixed property for the purpose of disposing of that fixed property after the construction, extension or improvement; and

“Intermediary” definition of section 1 of VAT Act

Posted on by admin_kmos

“intermediary” means a person who facilitates the supply of electronic services supplied by the electronic services supplier and who is responsible for issuing the invoices and collecting payment for the supply;

[Definition of “intermediary” inserted by section 8(1)(b) of Act 21 of 2018 effective on 1 April, 2019 and applicable in respect of supplies made on or after that date]

“Implementing agency” definition of section 1 of VAT Act

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“implementing agency” means-

(a)     the government of the Republic in the national, provincial or local sphere; or

(b)     any institution or body established and appointed by a foreign government, as contemplated in section 10(1)(bA)(ii) of the Income Tax Act; or

(c)     any person who has entered into a contract directly with the party contemplated in paragraph (a) or (b),

to implement, operate, administer or manage a foreign donor funded project;

[Definition of “implementing agency” inserted by section 66(1)(c) of Act 34 of 2019 effective on 1 April, 2020]

Section 18C (VAT) – Adjustments for leasehold improvements

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18C. Adjustments for leasehold improvements

 

Where goods have been supplied to a vendor, being a lessor, as contemplated in section 8(29), the lessor shall be deemed to have made a taxable supply in the course or furtherance of the lessor’s enterprise, and where a deduction of input tax would have been denied in terms of section 17(2), or to the extent that such goods are not wholly for consumption, use or supply in the course of making taxable supplies by that lessor, those goods shall be deemed to be supplied by the lessor at the time the leasehold improvements are completed, in accordance with the formula-

 

A × B × C

 

in which formula—

 

“A”     represents the tax fraction;

 

“B”    represents the amount stipulated in the agreement or if no amount is stipulated, the open market value as stipulated in section 3 applies, and

 

“C”    represents the percentage of the use or application of the goods for the purposes of making other than taxable supplies at the time the leasehold improvements are completed.

[Section 18C inserted by section 84(1) of Act 17 of 2017 effective on 1 April 2018]

“Outbound insurance policy” definition of section 1 of VAT Act

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“outbound insurance policy” means a travel policy which provides insurance cover in respect of a passenger transported from the Republic to a destination in an export country or from a place outside the Republic to another destination outside the Republic as part of an international journey;

[Definition of “outbound insurance policy” inserted by section 77(1)(d) of Act 17 of 2017 and substituted by section 89(c) of Act 23 of 2018]

“International journey” definition of section 1 of VAT Act

Posted on by admin_kmos

“international journey” means a journey commencing from the “point of departure” in the Republic to a destination outside the Republic (and vice versa), including (where applicable) stopovers en route to the destination, time spent in the destination country and the return journey;

[Definition of “international journey” inserted by section 77(1)(c) of Act 17 of 2017 and substituted by section 89(b) of Act 23 of 2018]

“Inbound insurance policy” definition of section 1 of VAT Act

Posted on by admin_kmos

“inbound insurance policy” means a travel policy which provides insurance cover in respect of a passenger transported from an export country into the Republic or between two places in the Republic as part of an international journey;

[Definition of “inbound insurance policy” inserted by section 77(1)(b) of Act 17 of 2017 and substituted by section 89(a) of Act 23 of 2018]

Subsections 2 and 3 of section 78A of VAT Act

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(2)     Where a person is deregistered in terms of the Sixth Schedule to the Income Tax Act and registers as a vendor, any supplies of goods or services-

 

(a)     made by that person before it became a vendor;


(b)     in respect of which the time of supply would have been deemed to have taken place while that person was a registered micro business had it been registered as a vendor during that time;


(c)     which were not included in the taxable turnover of that person while it was a registered micro business; and


(d)     the receipts for which are received after it became a vendor,


must be deemed to be made in the course or furtherance of that vendor’s enterprise in the tax period in which those receipts are received.

(3)     Subject to section 18(4)(b), where a person is deregistered in terms of the Sixth Schedule to the Income Tax Act and registers as a vendor, any value-added tax paid on expenditure it incurred while it was a registered micro business may not be deducted by that vendor as input tax.

[Section 78A inserted by section 115 of Act 60 of 2008 effective on 1 March 2009