SOLUTION TO QUESTION 1 Oct/Nov 2014
WESSEL (PTY) LTD
VAT Payable/refundable 28 February 2014 (2 month period)
Part A
VAT Output
Sales (500 000 - 135 000) x 15% 54 750
Sales 135 000, no invoice or payment therefore no VAT -
Fees from Creche - exempt -
Change of use cellphone(4 400 x 100% x15/115) 574
Total Vat output 55 324
VAT Input
Depreciation - not a supply -
Interest on bank account - exempt -
Imports
Customs value R120 000
10% of value R 12 000
Surchages R 2 500
Total R134 500 x 15% 20 175
Insurance - Motor vehicles (5 200 x 15%) 780
Insurance - Buildings (2450 x 15%) 368
Property rates and taxes - zero rated -
Salaries and wages - not carrying on an enterprise -
Total Vat input 21 323
Vat Refund (Vat output less Vat input) 34 001
Part B
POT O FLOWERS (PTY) LTD
a) Compulsory registration for VAT
A company is liable to register for VAT if taxable supplies exceed R1million. The foreign sales of
R700 000 made by Pot'oFlowers represent taxable supplies with VAT levied at a rate of zero
percent. As the supplies do not exceed R1million, the company is no liable to register for VAT.
b) Voluntary registration for VAT
A company can register for VAT voluntaryily if taxable supplies exceed R50 000. If Potoflowers
registers for VAT, it will be able to charge VAT at zero percent on sales and will be able to
claim VAT at 15% on inputs purchased. This will be beneficial to the company as they will be
able to claim more VAT than what they pay over to SARS.
WESSEL (PTY) LTD
VAT Payable/refundable 28 February 2014 (2 month period)
Part A
VAT Output
Sales (500 000 - 135 000) x 15% 54 750
Sales 135 000, no invoice or payment therefore no VAT -
Fees from Creche - exempt -
Change of use cellphone(4 400 x 100% x15/115) 574
Total Vat output 55 324
VAT Input
Depreciation - not a supply -
Interest on bank account - exempt -
Imports
Customs value R120 000
10% of value R 12 000
Surchages R 2 500
Total R134 500 x 15% 20 175
Insurance - Motor vehicles (5 200 x 15%) 780
Insurance - Buildings (2450 x 15%) 368
Property rates and taxes - zero rated -
Salaries and wages - not carrying on an enterprise -
Total Vat input 21 323
Vat Refund (Vat output less Vat input) 34 001
Part B
POT O FLOWERS (PTY) LTD
a) Compulsory registration for VAT
A company is liable to register for VAT if taxable supplies exceed R1million. The foreign sales of
R700 000 made by Pot'oFlowers represent taxable supplies with VAT levied at a rate of zero
percent. As the supplies do not exceed R1million, the company is no liable to register for VAT.
b) Voluntary registration for VAT
A company can register for VAT voluntaryily if taxable supplies exceed R50 000. If Potoflowers
registers for VAT, it will be able to charge VAT at zero percent on sales and will be able to
claim VAT at 15% on inputs purchased. This will be beneficial to the company as they will be
able to claim more VAT than what they pay over to SARS.
