What are the advantages if a VAT vendor changes from the payments basis to the invoice basis?
16 February 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: A municipality intends to change its basis for
submission of VAT returns from the payments basis to the invoice basis.They
want to know how it is going to affect them going forward, as well as the
advantages that will inform such a change.
A: The advantages or disadvantages of the invoice or payments basis will be
fact specific and should be dealt with on that basis.
Where a vendor
changes from the cash basis to the invoices basis section 15(4) of the VAT Act
requires that the vendor submit to the SARS such information in the prescribed
form calculating the tax payable or refundable.
Such amount is
calculated in terms of section 15(7) of the VAT Act for the change from payment
to invoice basis. Where an amount is refundable, it will constitute a refund in
terms of the TAA which means SARS are entitled to withhold the refund until it
has audited or verified the relevant information.
Also not that if
a vendor makes a changeover it will in terms of section 15(9) of the VAT Act it
must prepare a list of debtors and creditors showing the amounts owing as at
the end of the tax period before the approved changeover.
Disclaimer: Nothing in this query and answer 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 answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.