Q: I have a
client who is registered for VAT. The client buys and sells second hand tyres.
One of the client's main suppliers are not registered for VAT. Can my client
claim deemed input tax on the second hand tyres? I know that second hand car
salesmen can claim deemed input tax.
A: Para (b) of
the definition of Input tax in s1 VAT Act includes a deemed input on second
hand goods as defined in s1 which in our view will include second hand tyres.
Second-hand goods (other than fixed property) acquired under
a non-taxable supply (i.e. from a non VAT vendor) must comply with
s16(3)(a)(ii)(aa)VAT Act and the
documentation requirements in s20(8) which include:
a) VAT 264 form.
b) Proof of payment.
In addition to the above, the following information and
documents must be verified and retained by the vendor making the deduction:
Where the supplier is a natural person, his/her
identity number and a photocopy of his/her identity document.
Where the supplier is not a natural person, the
name and any legally allocated registration number of the supplier and a
photocopy of the business letterhead or other similar document of the supplier.
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.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.