Category: PART II – VALUE-ADDED TAX (VAT)

“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

Section 18C (VAT) – Adjustments for leasehold improvements

Posted on by admin_kmos

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]

Section 22 (VAT) – Irrecoverable debts

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22. Irrecoverable debts

(1)     Subject to subsection (6), where a vendor-

[Words preceding paragraph (a) substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(a)     has made a taxable supply for consideration in money; and

(b)     has furnished a return in respect of the tax period for which the output tax on the supply was payable and has properly accounted for the output tax on that supply as required under this Act; and

(c)     has written off so much of the said consideration as has become irrecoverable,

the vendor may make a deduction in terms of section 16(3) of that portion of the amount of tax charged in relation to that supply as bears to the full amount of such tax the same ratio as the amount of consideration so written off as irrecoverable bears to the total consideration for the supply, the deduction so made being deemed for the purposes of the said section to be input tax:

Provided that-

(i)      where tax charged in respect of a supply of goods under an instalment credit agreement has become irrecoverable, any deduction in terms of section 16(3) as provided for in this section, shall be restricted to the tax content of the amount which has become irrecoverable in respect of the cash value of such supply, as applicable in respect of that agreement in terms of section 10(6);

(ii)     the amount which has become irrecoverable in respect of such cash value shall be deemed to be an amount equal to the balance of the cash value remaining after deducting therefrom so much of the sum of the payments made by the debtor in terms of the said agreement as, on the basis of an apportionment in accordance with the rights and obligations of the parties to the said instalment credit agreement, may properly be regarded as having been made in respect of the cash value;

(iii)    the said tax content shall be an amount calculated by applying the tax fraction, as applicable at the time the supply under the said instalment credit agreement was in terms of section 9(3)(c) deemed to have taken place, to the amount deemed as aforesaid to be irrecoverable in respect of such cash value;

[Paragraph (iii) substituted by section 27 of Act 136 of 1992]

(iv)  a vendor who has transferred an account receivable at face value on a-

(aa)   non-recourse basis to any other person, shall not make any deduction in respect of such transfer in terms of this subsection; or

(bb)   recourse basis to any other person, may make a deduction in terms of this subsection only when such account receivable is transferred back to him and he has written off so much of the consideration as has become irrecoverable:

[Paragraph (iv) added by section 36 of Act 27 of 1997]

Provided further that the deduction provided for in this subsection shall not be made in terms of section 16(3)-

(i)      in respect of any amount which has become irrecoverable in respect of an instalment credit agreement, if the vendor has repossessed or is obliged to take possession of the goods supplied in terms of that agreement; or

[Paragraph (i) substituted by section 177 of Act 31 of 2013 effective on 1 April 2014]

(ii)     in the case of any vendor who is required to account for tax payable on a payments basis in terms of section 15, except in relation to any supply made by him to which section 9(2)(b) or section 9(3)(c) applies.

[Subsection (1) amended by section 33 of Act 136 of 1991]

(1A) Where a vendor-

(a)     has made a taxable supply for consideration in money; and

(b)     has furnished a return in respect of the tax period for which the output tax on the supply was payable (at the rate of tax referred to in section 7(1)) and has properly accounted for the output tax on that supply as required in terms of this Act; and

(c)     has transferred the account receivable relating to such taxable supply at face value to another vendor (hereinafter referred to as the recipient) on a non-recourse basis on or after the date of promulgation of the Taxation Laws Amendment Act, 1997,

and any amount of the face value (excluding any amount of finance charges or collection costs) of such account receivable has been written off as irrecoverable by such recipient, such recipient may make a deduction in terms of section 16(3) of an amount equal to the tax fraction (being the tax fraction applicable at the time such taxable supply is deemed to have been made) of such face value (limited to the amount paid by the recipient in respect of such face value) written off by him, the deduction so made being deemed for the purposes of the said section to be input tax.

[Subsection (1A) inserted by section 36 of Act 27 of 1997]

(2)     Where any amount in respect of which a deduction has been made in accordance with subsection (1) is at any time wholly or partly recovered by the vendor, or becomes recoverable by him by virtue of the reassignment to him of the underlying debt, that portion of the amount of such deduction as bears to the full amount of such deduction the same ratio as the amount of the irrecoverable debt recovered or reassigned bears to the debt written off shall be deemed to be tax charged in relation to a taxable supply made during the tax period in which the debt is wholly or partly recovered or assigned to such vendor.

[Subsection (2) substituted by section 27 of Act 136 of 1992]

(3)     Subject to subsection (3), where a vendor who is required to account for tax payable on an invoice basis in terms of section 15–

[Words preceding paragraph (a) substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(a)     has made a deduction of input tax in terms of section 16(3) in respect of a taxable supply of goods or services made to him; and

(b)     has, within a period of 12 months after the expiry of the tax period within which such deduction was made, not paid the full consideration in respect of such supply,

[Paragraph (b) substituted by section 95 of Act 30 of 1998]

an amount equal to the tax fraction, as applicable at the time of such deduction, of that portion of the consideration which has not been paid shall be deemed to be tax charged in respect of a taxable supply made in the tax period following the expiry of the period of 12 months: Provided that-

(i)      the period of 12 months shall, if any contract in writing in terms of which such supply was made provides for the payment of consideration or any portion thereof to take place after the expiry of the tax period within which such deduction was made, in respect of such consideration or portion be calculated as from the end of the month within which such consideration or portion was payable in terms of that contract;

[Subparagraph (ii) amended by section 86 of Act 20 of 2006]

(ii)     where-

(aa)   the estate of a vendor is sequestrated, whether voluntarily or compulsorily;

(bb)   the vendor is declared insolvent;

(cc)    the vendor has entered into a compromise in terms of section 155 of the Companies Act, 2008 (Act No. 71 of 2008), or a similar arrangement with creditors; or

[Subparagraph (cc) substituted by section 177 of Act 31 of 2013 effective on 1 April 2014]

(dd)   the vendor ceases to be a vendor as contemplated in section 8(2),

within 12 months after the expiry of the tax period within which that deduction was made, not paid the full consideration, the vendor must account for output tax in terms of this section equal to the tax fraction at the rate applicable at the time of such deduction of that portion of the consideration which has not been paid—

(AA) at the time of sequestration, declaration of insolvency or the date on which the compromise or the arrangement or similar arrangement was entered into; or

(BB)  immediately before the vendor ceased to be a vendor as contemplated in section 8(2); or

[Paragraph (ii) substituted by section 86(c) of Act 20 of 2006 and amended by section 66(1) of Act 23 of 2020 effective on 1 April, 2021]

(iii)    paragraph (ii) shall not be applicable where a vendor has already accounted for tax payable in accordance with this subsection

[Subparagraph (iii) inserted by section 86 of Act 20 of 2006 and substituted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

[Subsection (3) added by section 25 of Act 37 of 1996 and amended by section 36 of Act 27 of 1997, section 110 of Act 31 of 2005 and section 86 of Act 20 of 2006]

(3A)  Subject to subsection (6)(a), subsection (3) shall not be applicable in respect of a taxable supply made by a vendor which is a member of a group of companies, to another vendor which is a member of the same group of companies for as long as both vendors are members of the same group of companies.

[Subsection (3A) inserted by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(4)     If a vendor who has accounted for tax payable in accordance with subsection (3) at any time thereafter pays any portion of the consideration in respect of the supply in question, he may in terms of section 16(3) make a deduction of input tax of an amount equal to the tax fraction, as applicable at the time of the deduction contemplated in paragraph (a) of the said subsection (3), of that portion of the consideration so paid.

[Subsection (4) added by section 25 of Act 37 of 1996]

(5)     ……….

[Subsection (5) added by section 25 of Act 37 of 1996 and deleted by section 177 of Act 45 of 2003]

(6)

(a)     Where a vendor which is a member of a group of companies makes a taxable supply to another vendor which is a member of the same group of companies, the vendor who made the taxable supply may not make a deduction in terms of subsection (1) read with section 16(3) of any amount of tax that has become irrecoverable for as long as both vendors are members of the same group of companies.

(b)     For the purposes of paragraph (a) and subsection (3A), a ‘group of companies’ means a group of companies as defined in section 1 of the Income Tax Act if any other company would be part of the same group of companies as that company if the expression ‘at least 70 per cent of the equity shares of’ in paragraphs (a) and (b) of that definition were replaced by the expression ‘100 per cent of the equity shares of.

[Subsection (6) added by section 140 of Act 24 of 2011 with effect from 10 January 2012]

(7)     For purposes of this section, “face value” means the amount of the account receivable at the time of transfer less the amount written off by the seller, after adjustments have been made for debit and credit notes and amounts already written off as irrecoverable by the vendor.

[Subsection (7) added by section 91(1) of Act 23 of 2018 effective on 1 April, 2019]

Section 21 (VAT) – Credit and debit notes

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21. Credit and debit notes

 

(1)     This section shall apply where, in relation to the supply of goods or services by any registered vendor-

 

(a)     that supply has been cancelled; or

 

(b)     the nature of that supply has been fundamentally varied or altered; or

 

(c)     the previously agreed consideration for that supply has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason; or

 

(d)     the goods or services or part of the goods or services supplied have been returned to the supplier, including the return to—

 

(i)      a vendor of a returnable container, the vendor in such case being deemed for the purposes of this Act to have made the supply of the container in respect of which the deposit was charged, whether the supply was made by him or any other person; or

 

(ii)     a vendor, where a supply of an enterprise as a going concern, contemplated in section 11(1)(e) of this Act, was made to that vendor, the vendor in such case being deemed for purposes of this Act to have made the supply of the goods or services to the recipient, whether the supply was made by him or the other vendor that made the supply of that enterprise as a going concern; or

[Paragraph (d) substituted by section 26(1)(a) of Act 136 of 1992, amended by section 150(1)(a) of Act 22 of 2012 and substituted by section 8 of Act 22 of 2018]

 

(e)     an error has occurred in stipulating the amount of consideration agreed upon for that supply; or

[Paragraph (e) added by section 150(1)(b) of Act 22 of 2012 and substituted by section 51(1)(a) of Act 17 of 2023 effective on 1 April, 2024]

 

(f)      prepaid vouchers contemplated in section 10(19) have been issued by any registered vendor that is an “electronic communications service licensee” as defined in section 1 of the Electronic Communications Act, 2005 (Act 36 of 2005), and the nature of the supply specified on such voucher has been fundamentally varied or altered,

[Paragraph (f) added by section 51(1)(b) of Act 17 of 2023 effective on 1 April, 2024]

 

and the supplier has-

 

(i)      provided a tax invoice in relation to that supply and the amount shown therein as tax charged on that supply is incorrect in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events; or

 

(ii)     furnished a return in relation to the tax period in respect of which output tax on that supply is attributable, and has accounted for an incorrect amount of output tax on that supply in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events.

 

(2)     Where a supplier has accounted for an incorrect amount of output tax as contemplated in subsection (1), that supplier shall make an adjustment in calculating the tax payable by the supplier in the return for the tax period during which it has become apparent that the output tax is incorrect, and if-

 

(a)     the output tax properly chargeable in relation to that supply exceeds the output tax actually accounted for by the supplier, the amount of that excess shall be deemed to be tax charged by that supplier in relation to a taxable supply attributable to the tax period in which the adjustment is to be made, and shall not be attributable to any prior tax period; or

 

(b)     the output tax actually accounted for exceeds the output tax properly chargeable in relation to that supply, that supplier shall either make a deduction in terms of section 16(3) in respect of the amount of that excess (such amount being deemed for the purposes of that section to be input tax), or reduce the amount of output tax attributable to the said tax period in terms of section 16 (4) by the amount of that excess: Provided that the said deduction shall not be made where the excess tax has been borne by a recipient of goods or services supplied by the supplier and the recipient is not a vendor, unless the amount of the excess tax has been repaid by the supplier to the recipient, whether in cash or by way of a credit against any amount owing to the supplier by the recipient.

[Paragraph (b) amended by section 34 of Act 97 of 1993]

 

(3)     Subject to this section, where a tax invoice has been provided as contemplated in subsection (1) (i), and-

 

(a)     the amount shown as tax charged in that tax invoice exceeds the actual tax charged in respect of the supply concerned, the supplier shall provide the recipient with a credit note, containing the following particulars:

 

(i)      the words “credit note”;

[Subparagraph (i) substituted by section 27 of Act 23 of 2015 effective on 8 January 2016]

 

(ii)      the name, address and VAT registration number of the vendor;

[Subparagraph (ii) substituted by section 48 of Act 16 of 2004]

 

(iii)    the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the credit note relates to a supply in respect of which a tax invoice contemplated in section 20(5) was issued;

[Subparagraph (iii) substituted by section 26 of Act 136 of 1992, section 176 of Act 45 of 2003 and section 48 of Act 16 of 2004]

 

(iv)  the date on which the credit note was issued;

 

(v)   either-

 

(aa)   the amount by which the value of the said supply shown on the tax invoice has been reduced and the amount of the excess tax; or

 

(bb)   where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been reduced and either the amount of the excess tax or a statement that the reduction includes an amount of tax and the rate of the tax included;

[Subparagraph (v) substituted by section 26 of Act 136 of 1992]

 

(vi)    a brief explanation of the circumstances giving rise to the issuing of the credit note;

 

(vii)   information sufficient to identify the transaction to which the credit note refers;

 

 

(b)     the actual tax charged in respect of the supply concerned exceeds the tax shown in the tax invoice as charged, the supplier shall provide the recipient with a debit note, containing the following particulars:

 

(i)     the words “debit note”;

[Subparagraph (i) substituted by section 27 of Act 23 of 2015 effective on 8 January 2016]

 

(ii)     the name, address and VAT registration number of the vendor;

[Subparagraph (ii) substituted by section 48 of Act 16 of 2004]

 

(iii)    the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the debit note relates to a supply of goods in respect of which a tax invoice contemplated in section 20(5) was issued.

[Subparagraph (iii) substituted by section 26 of Act 136 of 1992, section 176 of Act 45 of 2003 and section 48 of Act 16 of 2004]

 

(iv)  the date on which the debit note was issued;

 

(v)     either-

 

(aa)   the amount by which the value of the said supply shown on the tax invoice has been increased and the amount of the additional tax; or

 

(bb)   where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been increased and either the amount of the additional tax or a statement that the increase includes an amount of tax and the rate of the tax included;

[Subparagraph (v) substituted by section 26 of Act 136 of 1992]

 

(vi)    a brief explanation of the circumstances giving rise to the issuing of the debit note;

 

(vii)   information sufficient to identify the transaction to which the debit note refers:

 

Provided that-

 

(A)    it shall not be lawful to issue more than one credit note or debit note for the amount of the excess;

 

(B)    if any registered vendor claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked “copy”;

 

(C)    a supplier shall not be required to provide a recipient with a credit note contemplated in paragraph (a) of this subsection in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier, if the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice.

 

(4)     Where a recipient, being a registered vendor, creates a document containing the particulars specified in this section and purporting to be a credit note or a debit note in respect of a supply of goods or services made to the recipient by a supplier, being a registered vendor, the document shall be deemed to be a credit note or, as the case may be, a debit note provided by the supplier under subsection (3) where-

 

(a)     the Commissioner has granted prior approval for the issue of such documents by a recipient or recipients of a specified class in relation to the supplies or supplies of a specified category to which the documents relate; and

 

(b)     the supplier and the recipient agree that the supplier shall not issue a credit note or, as the case may be, a debit note in respect of any supply to which this subsection applies; and

 

(c)     a copy of any such document is provided to the supplier and another copy is retained by the recipient:

 

Provided that-

 

(i)      where a credit note is issued in accordance with this subsection, any credit note issued by the supplier in respect of that supply shall be deemed not to be a credit note for the purposes of this Act;

 

(ii)   where a debit note is issued in accordance with this subsection, any debit note issued by the supplier in respect of that supply shall be deemed not to be a debit note for the purposes of this Act.

 

(5)     Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supplies and that it would be impractical to require that a full credit note or debit note be issued in terms of this section, the Commissioner may, subject to any conditions that the Commissioner may consider necessary, direct-

 

(a)     that any one or more of the particulars specified in paragraph (a) or, as the case may be, paragraph (b) of subsection (3) shall not be contained in a credit note or, as the case may be, a debit note; or

 

(b)     that a credit note or, as the case may be, a debit note is not required to be issued.

 

(6)     Where any recipient, being a registered vendor, has been issued with a credit note in terms of subsection (3)(a), or has written or other notice or otherwise knows that any tax invoice which the vendor holds is incorrect as a result of any one or more of the events specified in any of paragraphs (a), (b), (c), (d) or (e) of subsection (1) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which the credit note or that notice or other knowledge, as the case may be, relates, either the amount of the excess referred to in subsection (3)(a) shall be deemed to be tax charged in relation to a taxable supply made by the recipient attributable to the tax period in which the credit note was issued, or that notice or, as the case may be, other knowledge was received, or the amount of input tax deducted in terms of section 16(3) in the last-mentioned tax period shall be reduced by the amount of the said excess, to the extent that the input tax deducted in the first-mentioned tax period exceeds the output tax properly charged.

[Subsection (6) substituted by section 34 of Act 97 of 1993 and section 136 of Act 25 of 2015 effective on 1 April 2016]

 

(7)     Where any recipient, being a registered vendor, has been issued with a debit note in terms of subsection (3) (b) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which that debit note relates, the recipient may, subject to the provisions of section 17, make a deduction of input tax in terms of section 16(3) in respect of the amount of the excess referred to in subsection (3) (b) in the tax period in which the debit note is issued, to the extent that the output tax properly charged exceeds the input tax deducted.

 

(8)     Notwithstanding anything to the contrary in subsection (3), where a vendor acquires an enterprise from another vendor and as a result of that acquisition, the supplying vendor immediately ceases to be a vendor, and the purchasing vendor, within a period of six months from the date of acquisition, issues or receives a credit note or debit note, as the case may be, in respect of the acquired enterprise, that credit note or debit note may reflect the name, address and VAT registration number of the supplying vendor.

[Subsection (8) added by section 36 of Act 18 of 2009]

Section 20 (VAT) – Tax invoices

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20. Tax invoices

(1)     Except as otherwise provided in this section, a supplier, being a registered vendor, making a taxable supply (other than a supply contemplated in section 8(10)) to a recipient, must within 21 days of the date of that supply issue a tax invoice containing such particulars as are specified in this section: Provided that-

(i)      it shall not be lawful to issue more than one tax invoice for each taxable supply;

(ii)     if a vendor claims to have lost the original tax invoice, the supplier or the recipient, as the case may be, may provide a copy clearly marked “copy”.

[Subsection (1) amended by section 91 of Act 53 of 1999 and section 104 of Act 32 of 2004]

(1A) ……….

[Subsection (1A) inserted by section 157 of Act 60 of 2001 and deleted by section 104 of Act 32 of 2004]

(1B) Where a tax invoice contains an error in the particulars listed in subsection (4) or (5) and the circumstances contemplated in section 21(1)(a) to (e) of this Act are not applicable, the supplier must—

(i) correct that tax invoice with the correct particulars, within 21 days from the date of the request to correct it: Provided that the time of supply contemplated in section 9 of this Act remains unaltered; and

(ii) obtain and retain information sufficient to identify the transaction to which that tax invoice and the corrected tax invoice

[Subsection (1B) inserted by section 7 of Act 22 of 2018]

(2)     Where a recipient, being a registered vendor, creates a document containing the particulars specified in this section and purporting to be a tax invoice in respect of a taxable supply of goods or services made to the recipient by a supplier, being a registered vendor, that document shall be deemed to be a tax invoice provided by the supplier under subsection (1) of this section where-

(a)     the Commissioner has granted prior approval for the issue of such documents by a recipient or recipients of a specified class in relation to the taxable supplies or taxable supplies of a specified category to which the documents relate; and

(b)     the supplier and the recipient agree that the supplier shall not issue a tax invoice in respect of any taxable supply to which this subsection applies; and

(c)     such document is provided to the supplier and a copy thereof is retained by the recipient:

Provided that where a tax invoice is issued in accordance with this subsection, any tax invoice issued by the supplier in respect of that taxable supply shall be deemed not to be a tax invoice for the purposes of this Act.

(3)     Where a supply of goods is deemed by section 8(10) to be made and both the recipient and the supplier in relation to that supply are registered vendors, the recipient shall, within 21 days after the day on which such supply is deemed by section 9(8) to be made, create and furnish to the supplier a document which contains the particulars specified in this section, and such document shall for the purposes of this Act be deemed to be a tax invoice provided by the supplier under subsection (1) of this section.

(4)     Except as the Commissioner may otherwise allow, and subject to this section, a tax invoice (full tax invoice) shall be in the currency of the Republic and shall contain the following particulars:

(a)     The words “tax invoice”, “VAT invoice” or “invoice”;

[Paragraph (a) substituted by section 26 of Act 23 of 2015 effective on 8 January 2016]

(b)     the name, address and VAT registration number of the supplier;

[Paragraph (b) substituted by section 47 of Act 16 of 2004]

(c)     the name, address and where the recipient is a registered vendor, the VAT registration number of the recipient.

[Paragraph (c) substituted by section 175 of Act 45 of 2003 and section 47 of Act 16 of 2004]

(d)     an individual serialized number and the date upon which the tax invoice is issued;

(e)     full and proper description of the goods (indicating, where applicable, that the goods are second-hand goods) or services supplied;

[Paragraph (e) substituted by section 157 of Act 60 of 2001 and section 104 of Act 32 of 2004]

(f)     the quantity or volume of the goods or services supplied;

(g)     either-

(i)      the value of the supply, the amount of tax charged and the consideration for the supply; or

(ii)     where the amount of tax charged is calculated by applying the tax fraction to the consideration, the consideration for the supply and either the amount of the tax charged, or a statement that it includes a charge in respect of the tax and the rate at which the tax was charged:

[Paragraph (g) substituted by GN 2695 of 1991 and section 25 of Act 136 of 1992]

Provided that the requirement that the consideration or the value of the supply, as the case may be, shall be in the currency of the Republic shall not apply to a supply that is charged with tax under section 11.

[Subsection (4) amended by section 94 of Act 30 of 1998 and section 157 of Act 60 of 2001]

(5)     Notwithstanding anything in subsection (4), where the consideration in money for a supply does not exceed R5 000, a tax invoice (abridged tax invoice) shall be in the currency of the Republic and shall contain the particulars specified in that subsection or the following particulars:

[Words preceding paragraph (a) substituted by section 29 of Act 21 of 2012 effective on 20 December 2012]

(a)     The words “tax invoice”, “VAT invoice” or “invoice”;

[Paragraph (a) substituted by section 26 of Act 23 of 2015 effective on 8 January 2016]

(b)     the name, address and VAT registration number of the supplier;

[Paragraph (b) substituted by section 47 of Act 16 of 2004]

(c)     an individual serialized number and the date upon which the tax invoice is issued;

(d)     a description of the goods (indicating, where applicable, that the goods are second-hand goods) or services supplied;

[Paragraph (d) substituted by section 104 of Act 32 of 2004]

(e)     either-

(i)      the value of the supply, the amount of tax charged and the consideration for the supply; or

(ii)     where the amount of tax charged is calculated by applying the tax fraction to the consideration, the consideration for the supply and either the amount of the tax charged, or a statement that it includes a charge in respect of the tax and the rate at which the tax was charged:

[Paragraph (e) substituted by GN 2695 of 1991 and section 25 of Act 136 of 1992]

Provided that this subsection shall not apply to a supply that is charged with tax under section 11.

[Subsection (5) amended by section 33 of Act 97 of 1993, section 94 of Act 30 of 1998, section 157 of Act 60 of 2001, section 104 of Act 32 of 2004 and section 14 of Act 9 of 2007]

(5A)  Notwithstanding anything to the contrary in subsections (4) and (5), where a vendor acquires an enterprise from another vendor and as a result of that acquisition, the supplying vendor immediately ceases to be a vendor, and the purchasing vendor, within a period of six months from the date of the acquisition, issues or receives a tax invoice in respect of the acquired enterprise, that tax invoice may reflect the name, address and VAT registration number of the supplying vendor.

[Subsection (5A) inserted by section 35 of Act 18 of 2009]

(5B)   Notwithstanding any other provision of this Act, if the supply by a vendor relates to any enterprise contemplated in paragraphs (b)(vi) and (b)(vii) of the definition of “enterprise” in section 1, the vendor shall be required to provide a tax invoice containing such particulars as must be prescribed by the Commissioner by notice in the Gazette.

[Subsection (5B) inserted by section 176(1)(a) of Act 31 of 2013 and substituted by section 99(1) of Act 43 of 2014 and by section 19 of Act 33 of 2019]

(6)     Notwithstanding any other provision of this Act, a supplier shall not be required to provide a tax invoice if the total consideration for a supply is in money and does not exceed R50: Provided that the supplier shall provide the recipient with a document as is acceptable to the Commissioner.

[Subsection (6) amended by section 157 of Act 60 of 2001 and substituted by section 30 of Act 8 of 2010 effective on 2 November 2010]

(7)     Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supplies, and that it would be impractical to require that a full tax invoice be issued in terms of this section, the Commissioner may, subject to such conditions as the Commissioner may consider necessary, direct-

(a)     that any one or more of the particulars specified in subsection (4) or (5) shall not be contained in a tax invoice; or

(b)     that a tax invoice is not required to be issued; or

(c)     that the particulars specified in subsection (4) or (5) be furnished in any other manner.

[Paragraph (c) added by section 91 of Act 53 of 1999]

(8)     Notwithstanding anything in this section, where a supplier makes a supply (not being a taxable supply) of second-hand goods to a recipient, being a registered vendor, the recipient shall in the form as the Commissioner may prescribe, maintain a declaration by the supplier stating whether the supply is a taxable supply or not and shall further maintain sufficient records to enable the following particulars to be ascertained:

(a)

(i)    The name of the supplier and-

(aa)    where the supplier is a natural person, his identity number; or

(bb)   where the supplier is not a natural person, the name and identity number of the natural person representing the supplier in respect of the supply and any legally allocated registration number of the supplier:

Provided that the recipient-

(A)    shall verify such name and identity number of any such natural person with reference to his identity card, as contemplated in section 1 of the Identification Act, 1997 (Act 68 of 1997), and retain a photocopy of such name and identity number appearing in such identity card; or

[Paragraph (A) substituted by section 20 of Act 24 of 2020]

(B)    shall verify such name and registration number of any supplier other than a natural person with reference to its business letterhead or other similar document and retain a photocopy of such name and registration number appearing on such letterhead or document; and

(ii)   the address of the supplier;

(b)     the date upon which the second-hand goods were acquired;

[Paragraph (b) substituted by section 176(1)(b) of Act 31 of 2013 and by section 31(1)(b) of Act 20 of 2022 effective on 1 January, 2023]

(c)     a description of the goods;

(d)     the quantity or volume of the goods;

(e)     the consideration for the supply; and

(f)      proof and date of payment.

[Subsection (8) amended by section 35 of Act 27 of 1997, by section 94(e) of Act 30 of 1998, by section 91(c) of Act 53 of 1999, by section 104(1)(f) of Act 32 of 2004 and by section 38 of Act 21 of 2006, substituted by section 30(b) of Act 8 of 2010 and amended by section 31(1)(a) of Act 20 of 2022 effective on 1 January, 2023]

(8A)   Notwithstanding anything in this section, where a supplier makes a deemed supply (not being a taxable supply) of goods contemplated in section 8(10) to a recipient, being a registered vendor, the recipient shall maintain sufficient records to enable the following particulars to be ascertained:

(a)     The date upon which the goods were repossessed or surrendered, as the case may be;

(b)     particulars referred to in paragraphs (a), (c), (d) and (e) of subsection (8); and

(c)     further particulars in the form and manner as the Commissioner may prescribe.

[Subsection (8A) added by section 31(1)(c) of Act 20 of 2022 effective on 1 January, 2023]

Section 19 (VAT) – Goods or services acquired before incorporation

Posted on by admin_kmos

19. Goods or services acquired before incorporation

 

Any company, being a vendor, shall, where any amount of tax has been charged in terms of section 7 in relation to the acquisition of goods or services for or on behalf of that company or in connection with the incorporation of that company, and those goods or services were acquired prior to incorporation by a person who-

 

(a)     was reimbursed by the company for the whole amount of the consideration paid for the goods or services; and

(b)     acquired those goods or services for the purpose of an enterprise to be carried on by the company and has not used those goods or services for any purpose other than carrying on such enterprise,

be deemed to be the recipient of the goods or services and to have paid the tax so charged as if the supply or the payment of the tax had been made during the tax period in which the reimbursement referred to in paragraph (a) is made: Provided that this section shall not apply in relation to any goods or services where-

(i)      the supply of those goods or services by that person to the company is a taxable supply, or is a supply of second-hand goods not being a taxable supply; or

(ii)     those goods or services were so acquired more than six months prior to the date of incorporation of the company; or

(iii)    the company does not hold sufficient records to establish the particulars relating to the deduction to be made.

Section 18B (VAT) – Temporary letting of residential fixed property

Posted on by admin_kmos

18B.  Temporary letting of residential fixed property (ceases to apply on 1 January 2018)

(1)     For the purposes of this section “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.

(2)     Notwithstanding the provisions of section 18(1), where goods being fixed property consisting of any dwelling-

(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; and

(b)     is subsequently temporarily applied by that vendor for supplying accommodation in a dwelling under an agreement for the letting and hiring thereof,

the supply of such fixed property shall, subject to subsection (3), be deemed not to be a taxable supply in the course or furtherance of that vendor’s enterprise.

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

(a)     a period of 36 months after the conclusion of the agreement contemplated in subsection (2)(b); or

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

(4)     ……….

[Subsection (4) deleted by section 174 of Act 31 of 2013 effective on 10 January 2012]

[Section 18B inserted by section 139 of Act 24 of 2011 with effect from 10 January 2012 and ceases to apply on 1 January 2018 – date of cessation in section 139 of Act 24 of 2011, as substituted by section 111 of Act 43 of 2014]

Section 18A (VAT) – Adjustments in consequence of acquisition of going concern wholly or partly for purposes other than making taxable supplies

Posted on by admin_kmos

18A.  Adjustments in consequence of acquisition of going concern wholly or partly for purposes other than making taxable supplies

 

(1)     Where-

 

(a)     an enterprise or part of an enterprise has been supplied to any vendor; and

 

(b)     the supply of such enterprise or part was charged with tax at the rate of zero per cent in terms of section 11(1)(e); and

 

(c)     such enterprise or part, as the case may be, or any goods or services which formed part of such enterprise or part are acquired by such vendor wholly or partly for a purpose other than for consumption, use or supply in the course of making taxable supplies,

 

such enterprise, part, goods or services, as the case may be, shall be deemed to have been supplied by him by way of a taxable supply by him in the course of his enterprise: Provided that where the intended use of such enterprise, part, goods or services, as the case may be, in the course of making taxable supplies is equal to not less than 95 per cent of the total intended use of such enterprise, part, goods or services, as the case may be, the enterprise, part, goods or services concerned may for the purposes of this Act be regarded as having been acquired wholly for the purpose of consumption, use or supply in the course of making taxable supplies.

[Subsection (1) amended by section 19 of Act 20 of 1994 and section 90 of Act 53 of 1999]

 

(2)     Notwithstanding anything in this Act, the value of the supply deemed by subsection (1) to have been made by the vendor, shall be the full cost to such vendor of acquiring such enterprise, part, goods or services, as the case may be, reduced by an amount which bears to the amount of such full cost the same ratio as the intended use or application of the enterprise, part, goods or services in the course of making taxable supplies bears to the total intended use or application of the enterprise, part, goods or services: Provided that-

 

(i)      the cost to such vendor of acquiring such enterprise, part, goods or services may be reduced by any amount which represents an appropriate allocation of such full cost to the acquisition of any goods or services which form part of such enterprise or part of an enterprise and in respect of the acquisition of which by the vendor a deduction of input tax would be denied in terms of section 17(2); or

 

(ii)     where such enterprise, part, goods or services were acquired-

 

(aa)  by means of a supply made by a vendor for no consideration or for a consideration in money which is less than the open market value of the supply; and

 

(bb) in circumstances where the supplier and the recipient are connected persons,

 

the cost of such enterprise, part, goods or services shall be deemed to be the open market value of the supply of such enterprise, part, goods or services.

[Subsection (2) amended by section 24 of Act 37 of 1996]

 

(3)     Notwithstanding anything in this Act, the supply deemed by subsection (1) to have been made by the vendor shall be deemed to be made in the tax period in which the supply of the enterprise or part of an enterprise is made.

 

(4)     For the purposes of this section and sections 10(9), 18(4) and (5), the cost to the vendor of any goods or services acquired by a vendor in the circumstances contemplated in subsection (1) shall be deemed to be an amount equal to the aggregate of an amount which represents an appropriate allocation of the full cost to the vendor of the enterprise or part of an enterprise to those specific goods or services and an amount determined by applying the rate of tax applicable at the time of supply contemplated in subsection (3) to the amount of such appropriate allocation.

[Section 18A inserted by section 24 of Act 136 of 1992]