FAQ - 5 March 2015
03 March 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. In respect of a VAT Payment over R5 mil- what type of payment method is the PASA Limitation on?
Q: We have a VAT payment to SARS that is over R5 million. We are aware that the PASA Limitation of R500 000.00 is only applicable to cheque payments/EFT. However, a SARS agent advised me that Efiling has a R5 million limitation for payments. We normally pay our VAT via credit push.
Should we do two payments for the one VAT return? Will the credit push option allow us to alter the amount with the second payment? Please could you advise on how payment should be made?
A: It is our understanding that the R5m PASA limitation only applies to EFT payments and not Efiling credit push transactions (See attached Standard Bank Brochure). This seems to be confirmed in the SARS VAT 404 guide at 9.5 that eFiling is not affected by the PASA limits, only the other payment methods.
2. What are the VAT consequences for an individual involved in the training and development of SMEs?
Q: There is client who is involved in the training and development of small and medium enterprises (SMEs) nationally. I would like to know their status in terms of paying VAT. Are they supposed to be charging VAT or not?
A: The supply of education and training will constitute a taxable supply for VAT purposes unless specifically zero rate or exempt. We assume all the training occurs in South Africa to SA residents. The exemption from VAT for the supply of educational services only applies to the supplies listed in section 12(h) of the VAT Act, which includes supplies made by the state or a registered school, by a higher education institution established or registered in terms of the Higher Education Act, by an approved Public Benefit Organisation for specified types of education and services by a university or technikon.
You would therefore have to determine whether the vendor is so registered above and making supplies in terms of such registered activities.
3. How will SARS levy interest and penalties in respect of the under-payment of provisional tax?
Q: My client understands that he has to declare the correct provisional tax for the upcoming period but does not have the cash flow to pay it. What penalties and interest will be calculated for provisional tax and is there a 'pay off' period allowed?
A: A late payment penalty of 10% is imposed on late payment of provisional tax. Furthermore, since December 2012, the amount paid late is excluded for determination of the understatement penalty in para 20 Fourth Schedule of the Income Tax Act (ITA) i.e. you will pay a higher underestimation penalty as it is not just on underestimate amount but on the amount actually paid during the year of assessment.
As to remedies, section 167 of the Tax Administration Act (TAA) allows SARS to enter into a payment deferral agreement with a taxpayer subject to the conditions in section 167 & section 168 of the TAA being met. It is unclear whether the deferred amount would still be subject to late payment /underestimation penalty as the relevant provisions in the TAA and Fourth Schedule of the ITA don’t seem to prescribe what happens in this case or provide the SARS with discretion to determine otherwise for these payment purposes.
4. Is there a maximum time period within which SARS must process a VAT registration application?
Q: Does SARS have a time limit to process an application for VAT registration once the complete application has been delivered to a SARS branch office?
A: In our view neither section 23 of the VAT Act nor section 22 of the Tax Administration Act prescribe a maximum time period that SARS may take to apply its mind as to whether the registration should be accepted and is merely obligated to provide written notification once an application is refused.
5. Is the supply of labour subject to VAT?
Q: Company A and company B are in the same group of companies. All the employees are employed in Company A. Company A recovers the costs of the employees who work for company B, from company B. Must Company A charge output VAT on the invoice?
A: The charge from Company A to Company B in respect of the services rendered by its employees to Company B does not in our view constitute the payment of remuneration by an employer to an employee per proviso (iii)(a) to the definition of "enterprise” in section 1 of the VAT Act. Therefore such service would in our view constitute a standard rated supply for the purposes of section 7(1) VAT Act.
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.