Vat: Welfare Organisations & motor cars
S1 of the Vat Act defines a "Motor car” as follows: "includes
a motor car…minibus…and is constructed …wholly or mainly for the carriage of passengers,
but does not include-
(a) vehicles capable of accommodating only one person or
suitable for carrying more than sixteen persons, or
In terms of S17 (2)( c ) registered vat vendors may not
claim an input tax deduction on acquisition of motor cars as defined except in
certain cases eg motor car dealers .
Scenario: An orphanage, which is a welfare organisation
- is a PBO and registered for Vat, buys a minibus (supplied by a registered vat
vendor) for the transport of its children to and from school etc etc. The
children concerned are pre-primary and primary school children. Hence, the minibus is able to transport at
least twenty children (passengers) at a time. The home is not contravening the traffic
laws in terms of overloading since the relevant ordinance makes allowance for
Based on the definition of motor car as set out above, it
would seem that the Home would be able to claim the input tax as a deduction on
the acquisition of the minibus. Why? Because, in this particular case it may legally
transport more than 16 persons a time. That is the
deduction is not prohibited in terms of S17 (2) (c).
What do you think?