SOLUTION TO QUESTION 1
Part A
Alala
VAT Payable/refundable 30 April 2015 (2 month period)
VAT Output
Sales ((650 x 50 x 2) + (650 x 23 x 1)) x 15%) 11 993
Sales (400 x 3 x 40) x 15% x 60% 4 320
Payment received in advance (5 928 x15/115) 773
Vat charger on earlier of invoice or payment
17 086
VAT Input
Purchases (27 500 x 15/115) x 80% 3 587
20% of purchases is provision of entertainment, Vat denied
Salaries - no VAT - not carrying on an enterprise -
Water and electricity - (8 540 x 15/115) 1 114
Loan - Financial services no VAT -
Second hand fridge - 15 200 x 15/115 1 983
Lower of cost/Market value x 15/115 - claimed upon payment
DSTV subscription - 6 000 x15/115 in the business of entertainment 783
Bank charges - 9 250 x 15% 1387.5
Total Vat output 8 854
Vat payable (Vat output less Vat input) 8 232
Part b
a) An eight seater bus is a motor vehicle as defined as it has less than 16 seats. Therefore,
Alala will not be able to claim input Vat on the acquisition. To be able to claim Vat Alala has
to buy a vehicle with more than 16 seats.
b) Vat payments are due on the 25th day of the first month after period end, and for e-filing,
the last day of the month.
c) if payment is made after the last day of the month, penalties and interest will be levied.
Part A
Alala
VAT Payable/refundable 30 April 2015 (2 month period)
VAT Output
Sales ((650 x 50 x 2) + (650 x 23 x 1)) x 15%) 11 993
Sales (400 x 3 x 40) x 15% x 60% 4 320
Payment received in advance (5 928 x15/115) 773
Vat charger on earlier of invoice or payment
17 086
VAT Input
Purchases (27 500 x 15/115) x 80% 3 587
20% of purchases is provision of entertainment, Vat denied
Salaries - no VAT - not carrying on an enterprise -
Water and electricity - (8 540 x 15/115) 1 114
Loan - Financial services no VAT -
Second hand fridge - 15 200 x 15/115 1 983
Lower of cost/Market value x 15/115 - claimed upon payment
DSTV subscription - 6 000 x15/115 in the business of entertainment 783
Bank charges - 9 250 x 15% 1387.5
Total Vat output 8 854
Vat payable (Vat output less Vat input) 8 232
Part b
a) An eight seater bus is a motor vehicle as defined as it has less than 16 seats. Therefore,
Alala will not be able to claim input Vat on the acquisition. To be able to claim Vat Alala has
to buy a vehicle with more than 16 seats.
b) Vat payments are due on the 25th day of the first month after period end, and for e-filing,
the last day of the month.
c) if payment is made after the last day of the month, penalties and interest will be levied.
