Are payments received from debtors i.r.o supplies made prior to registration exempt from VAT?
19 May 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: A taxpayer
(individual) sole proprietor registers for VAT in Mar 2015 and obtains his
registration confirmation from SARS in March 2015.
The taxpayer has opted for a cash basis in terms
of section 15 of the VAT act.
In terms of Section 9(1) and Section 16 of the
VAT Act, deposits received from customers to invoices made prior to March 2015,
will not be subject to VAT;
The taxpayer business consists of professional
Must these payments received from debtors who were invoiced
prior to VAT registration must be disclosed on the VAT return as "Exempt or Non
A: Our guidance
assumes that SARS approved (in terms of section 15(2)) the application to
account for the tax on the payments basis.
From the facts it is clear that the receipts (you refer to them as
deposits) are in respect of supplies made prior to the effective date of
registration as a vendor and consequently are not in respect of taxable
supplies. Section 16(3)(b)(ii) then
requires that the vendor must account for the output tax in respect of the
taxed charged and paid during that period.
On that basis we submit that the vendor doesn’t have to account for
these receipts. We know that the VAT201
refers to and requires detail with regard to "exempt and non-supplies”.
We submit that the receipt in respect of a supply in a
period before registration is not in respect of supply and it is not needed to
be accounted for on the return.
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.