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Is the supply of lucerne by a farmer subject to VAT if the purchaser is also a farmer?

Wednesday, 15 April 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: My client is a farmer who produces and sells lucerne.

1.            If the purchaser is a farmer and can produce a VAT registration certificate that proves this, is the supply vatable?

2.            Is lucerne a vatable item or does it qualify to be sold at a zero VAT rate?

A: Item 1 states that animal feed, i.e. goods consisting of—

(a) (i) any substance obtained by a process of crushing, gristing or grinding, or by addition to any substance or the removal therefrom of any ingredient; or

(ii) any condimental food, vitamin or mineral substance or other substance which possesses or is alleged to possess nutritive properties; or

(iii) any bone product; or

(iv) any maize product,

intended or sold for the feeding of livestock, poultry, fish or wild animals (including wild birds); or ...

The phrase ‘maize product’ is not described in the Act and must take its dictionary meaning.  According to the Oxford dictionary maize in English (noun) means "a Central American cereal plant which yields large grains (corn or sweetcorn) set in rows on a cob. The many varieties include some used for stockfeed and corn oil. Zea mays, family Gramineae and alfalfa mean "a leguminous plant with clover-like leaves and bluish flowers, native to SW Asia and widely grown for fodder. Also called lucerne.” 

It may well be that lucerne is not a maize product, but it is outside the scope of guidance on tax legislation to comment on whether or not lucerne is a maize product.  SARS, in the VAT404 or otherwise provides no guidance on the meaning of maize products.  We suggest the client obtain a ruling from SARS in this regard or obtain confirmation from a specialist in agriculture produce.  If it is not the rate of zero per cent can’t be applied. 

In order to be able to purchase the above goods at the zero rate, the following requirements must be met:

• The notice of VAT registration (VAT103) must be presented to the supplier.

• The VAT103 must contain a clause no. 7 on it, confirming that the main business is a farming agricultural or pastoral enterprise.

• The VAT registration number of the purchaser must appear on the tax invoice.

• The goods supplied must be specified in Part A of Schedule 2 to the VAT Act.

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.

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