FAQ - 22 January 2015
20 January 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. VAT implications/registrations between car rental/hire and a taxi
Q: A client of mine has a taxi business; I would like to know if he can register for VAT. The activities he conducts are car rental/hire and a taxi service.
A: With regards to the query the VAT Act does not exclude taxis operators from registering for VAT they would still have to comply with the minimum registration requirements. In this respect a minimum preceding 12 month taxable supplies of R50 000 (s23(3)(c) VAT Act ).
However, where the transport of people and goods are not cross border per section 11(2)(a) VAT Act, it will be an exempt supply in terms of section 12(1)(g) VAT Act which will result in the taxi operator most probably not achieving the minimum taxable supplies threshold for registration.
2. Should VAT be charged on chartered flights from RSA to another country?
Q: I have a client who does charter flights to disaster areas on behalf of the SA government, therefore he invoices the government. He charters the plane from an international company and pays them in dollars, and they do not charge him any VAT. Now he has been told by the charter company that he does not need to charge the government VAT as it is international flights. I do not agree as the client resides is SA and the services originates in SA. Please can you confirm this for me?
A: With regards to the query you did not state that the disaster areas are in an export country (i.e. outside SA) but we have assumed so. The transport of passengers by air to or from a place in South Africa to an export country is a taxable supply subject to VAT at the zero rate in terms of section 11(2)(a) VAT Act. It therefore does not matter that the flights originate or end in SA. However even the transport of passengers by air from a place in SA to another place in SA will be subject to VAT at the zero rate if it constitutes "international carriage" as defined in article 1 of the Convention set out in the Carriage by Air Act 17 of 1946 (section 11(2)(b) VAT Act).
3. Waiting period of receiving refunds from SARS
Q: Where can I get information on the time periods that SARS is allowed to take after notification/finalization of actions? For example – I have a client that received a Completion Letter re Verification of assessment (2014 IT) on 11/11/2014 – up to date the client has not received his refund from SARS. SARS informed us that this has a 60 working days waiting period for payment (after the completion letter). Please let me know where we can find the waiting periods for the different processes of SARS.
A: As far as income tax is concerned, unfortunately there is no provision that compels SARS to pay a refund to a taxpayer within a specified time-frame, notwithstanding the fact that SARS has in previous years paid out refunds very quickly. The periods in which SARS previously attempted to pay the refunds were based more on their internal policy rather than law.
Furthermore, the Tax Administration Act (TAA) does not prescribe a period in which SARS must be finished with the verification of supporting documents (or an audit).
However, section 42(1) of the TAA states:
A SARS official involved in or responsible for an audit under this Chapter must, in the form and in the manner as may be prescribed by the Commissioner by public notice, provide the taxpayer with a report indicating the stage of completion of the audit.
Here is the very short public notice released by the Commissioner in terms of section 42(1):
SARS "time periods”
There’s not really one place or document that contains all the waiting periods for the different SARS processes, but the section 103 of the Tax Administration Act rules (the "ADR rules”), which deal with the entire objection and appeal process, do contain time periods SARS must stick to regarding things like providing reasons for an assessment, informing the taxpayer of the outcome of an objection/appeal, etc. So you can consult that document, as well as its SARS guide, for those details. You can also consult the Short Guide to the Tax Administration Act for the SARS time periods of their other ‘administration’ processes. In conclusion, you would have to check the relevant tax provision (in the applicable Act) dealing with the relevant process and look for a time period there.
4. Remedies available to a taxpayer whose tax refund was paid into a fraudulent bank account
Q: A client was due to receive a refund on their recent tax return submitted. However when the client followed up with SARS they were informed the refund had been paid out to a fraudulent bank account. What remedies are available to assist the client?
A: With regards to the above query, the client must first lodge a complaint with SARS by calling the SARS call centre on 0800 00 7277. Upon lodging the complaint SARS would provide a reference number to the Client. SARS will give the client a time frame as to when the issue will be resolved; if the client does not receive any feedback once the timeframe has expired the client should lodge a complaint with SARS SSMO (SARS Service Monitoring Office). The SARS SSMO can be contact via e-mail on firstname.lastname@example.org. Should the SSMO not be able to assist you, we will then assist in escalating the matter to senior management at SARS.
Disclaimer: Nothing in these queries and answers should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.