FAQ - 1 June 2016
01 June 2016
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Does the word invoice after
"pro-forma" make this a valid tax invoice?
client uses the wording "pro-forma” on his invoice to collect a deposit from
his clients. If they do not pay him then he does not issue a tax invoice and
therefore does not declare the vat thereon. Is this correct?
A: There are two issues raised in this
relates to a deposit. In terms of the proviso to the definition of
deposit in section 1(1) of the Value-Added Tax Act, "a deposit (other than a
deposit on a returnable container), whether refundable or not, given in respect
of a supply of goods or services shall not be considered as payment made for
the supply unless and until the supplier applies the deposit as consideration
for the supply or such deposit is forfeited”. What the document is called
that is used to collect the deposit is irrelevant.
regard to a valid tax invoice, section 1(1) provides that it is document
provided as required by section 20. Both sections 20(4) (full tax invoice)
and 20(5) requires that a "tax invoice” must "contain the … words "tax
invoice”, "VAT invoice” or "invoice” …”
invoice, also defined in section 1(1), means a document notifying an obligation
to make payment. If a ‘pro forma invoice’ notifies an obligation to make
payment, it would be an invoice as envisaged in the Value-Added Tax Act.
well be that the phrase "pro forma invoice” doesn’t constitute a valid tax
invoice, but that may be irrelevant. This is because the time of
supply is "deemed to take place at the time an invoice is issued by the
supplier or the recipient in respect of that supply or the time any payment of
consideration is received by the supplier in respect of that supply, whichever
time is earlier.” In other words, the issuing of a valid tax invoice is
not relevant to when the tax must be accounted for if an invoice was
2. Can a minor individual be registered
for income tax?
have a client who wants us to register his two daughters who are minors for
income tax. The reason is to distribute income from a trust to them. I know
that S7 says that the trust distributions to a minor will be taxed in the
parents hands, however, the question we have is can a minor be registered for
income tax as per tax act?
A: The obligation to register as a taxpayer is to be determined mainly
under section 66 of the Income Tax Act, read with the annual notice to submit
returns, and then also the Tax Administration Act. In terms of the notice
relevant to the 2015 year of assessment, a natural person who, at the end of
the year of assessment, was under the age of 65 and whose gross income didn’t
exceed R70 700, does not have to furnish a return. If the taxable income
of the individual concerned is also less than this amount, quite likely under
the circumstances, no tax would be payable. This also applies to minor
accepted that the two minor children are beneficiaries of the trust – in other
words, that the trustees are mandated to vest the amounts. The fact that
the amount was vested in a minor doesn’t make it ‘non-taxable’ as you
say. Section 25 of the Income Tax Act, which as you indicated, is subject
to section 7 (in this instance probably section 7(3)). In that instance
there will be no amount that accrues to the minor and no section 25
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