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Are payments received from debtors i.r.o supplies made prior to registration exempt from VAT?

Tuesday, 19 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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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.

1.            The taxpayer has opted for a cash basis in terms of section 15 of the VAT act.

2.            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;

3.            The taxpayer business consists of professional services only.

Must these payments received from debtors who were invoiced prior to VAT registration must be disclosed on the VAT return as "Exempt or Non Supplies”?

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.



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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