TAX3701 EXAM PACK

SOLUTION 1: VALUE – ADDED TAX (VAT) (a) In terms of s23(1), a person is required to register:  At the end of the month during which the total value of the taxable supplies for the preceding 12 months exceeded R1 000 000;  At the beginning of the month, if it is anticipated that the total value of the taxable supplies in terms of written contractual agreements will exceed R1 000 000 for the following 12 months; or  At the end of the month where the total value of the taxable supplies made by foreign suppliers of electronic services has exceeded R50 000. Where a person carries on two separate businesses, he must register when the joint taxable supplies of the two businesses exceeds R1 000 000, since it is the “person” who conducts the enterprise not the “enterprise”, that registers for VAT. If each business is conducted in a separate company (or other legal person), each company is required to register only when the taxable supplies of that company exceed R1 000 000. Branches or divisions within an enterprise may register as separate enterprises if each balance:  Maintain it`s own independent accounting system, and  Can be separately identified by reference to the nature of activities carried out or the location of the branch or division. A person may, however, register voluntarily if that person is conducting an enterprise and if:  The value of the taxable supplies of all his enterprises are more than R50 000 during a previous 12 month period, or,  The total value of taxable supplies of that person has not exceeded R50 000, but can reasonably be expected to exceed that amount within 12 months from the date of registration as a vendor.  That person is continuously and regularly carrying on an activity listed in the regulation made by the Minister. The nature of these activities, are that it is likely to make taxable supplies only after a period of time. The VAT Act provides for certain requirements that must be fulfilled before a person can register, such as having a fixed place of residence, having a bank account and keeping proper accounting records. The onus rests on the person to register when it becomes necessary, and this must be done within 21 days after the person has become liable for registration (section 22 of the Tax Administration Act). A person that is required to register must fully complete a VAT101 form. All required documentation should be attached to the registration form for the application to be valid, and the form should be submitted to the SARS branch nearest to the enterprise. NB: YOU DO NOT HAVE TO WRITE ALL THE ABOVE, ONLY SUMMARISE TAX3701 EXAM PACK (b) CALCULATION OF VAT PAYABLE OR REFUNDABLE FOR THE MONTH OF FEBRUARY 2017 R VAT Output Fees (65 000 ∗ 14%) Fuel cost (5 000 ∗ 14%) Accommodation (15 000 ∗ 14%) Export services (exempt supply) Fringe benefit [(340 000 ∗ 100 114 ) ∗ 0.3% − 85] ∗ 14 114 9 100 700 2 100 - 99 11 999 Input VAT 3 488 Motor vehicle cost (VAT input denied) Membership Fees (VAT input denied) Fuel cost (zero rated) Accommodation (4 500 ∗ 14%) Gautrain tickets (exempt) Printer (to the extent that payment has been made) (3 500 ∗ 14 114 ) New Computer (15 000 ∗ 14%) Personal computer (no input VAT since no VAT was paid) Electricity (1 800 ∗ 14%) Bank charges (540 ∗ 14%) Interest(exempt supply) - - - 630 - 430 2 100 - 252 76 VAT Payable (