Can a notional input VAT credit be claimed on purchases of used material from homeless persons?
19 March 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: My client has a recycling business. He does not
the manufacture paper and plastic but distributes them. The client purchases these
used materials from non- vendors (basically homeless people) as he is buying
Can the client claim notional input VAT on
these purchases? If so, what is the procedure?
A: Your client (assuming he's a
vendor) can claim notional input VAT on the purchases if he has a tax invoice to
substantiate the purchase (see section 20 of the VAT Act). The tax invoice
should also specify that the goods are second hand.
vendor must maintain records as provided for in section 20(8) of the VAT Act.
The provision states:
supplier makes a supply (not being a taxable supply) of second-hand goods...to
a recipient, being a registered vendor, the recipient shall in the form as the
Commissioner may prescribe, maintain a declaration by the supplier stating
whether the supply is a taxable supply or not and shall further maintain
sufficient records to enable the following particulars to be ascertained".
declaration is the VAT264 and can be accessed here:
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.