,TAX3701 PRE-EXAM QUICK NOTES:
1. VAT – 14% if amounts exclude VAT; 14/114 if amounts include VAT
a. Compulsory registration: total value of taxable supplies for the
preceding 12 months exceed R1 million
b. Voluntary registration: total taxable supplies for the preceding 12
months exceed R50 000
Output VAT: levied on services rendered by
the taxpayer (on invoice amount, not the
amount received)
Goods supplied or services rendered x 14% XXX
Exempt supplies: nil
• Financial services
• Donated goods
• Residential accommodation
• Commercial property if owned for
less than 28 days (if more than 60
days taxpayer must pay VAT on 60%
of the whole charge, vendor can
claim full input VAT)
• Hire and letting accommodation
• Sale or letting of land outside SA
• Services of body corp when paid for
by levies
• Transporting of fare paying
passengers and their personal items
in taxi or bus
• Educational services by state school
or varsity that is a PBO
• Varsity, school, technikon, or college
fees
• Childcare services by crèche or
aftercare
Fringe benefit: use of MV
Cost (excl VAT) XXX
Consideration: if it is a motor vehicle
as defined, multiply by 0.3%; if it is
not, multiply by 0.6% XXX
(Less) Deductions (XXX)
Multiply by tax fraction (14/114) XXX
Multiply by the percentage of taxable
usage XXX XXX
If it is a motor car as defined, input tax is
denied, if not the employer can claim VAT
paid on the vehicle as an input tax credit
(XXX)
Zero-rated items: XXX x 0%
• Export of moveable goods overseas
, or goods delivered to foreign ship or
plane if for use on ship or plane
• Transport overseas
• Services rendered outside of SA
• Sale of going concern
• Sale of parts of enterprise if can
operate separately and only for going
concern part (must be more than
50% for the purpose of the going
concern)
• Small retailers VAT package
• Goods and services for farming or
agriculture
• Gold coins or Kruger Rands by
Reserve Bank
• Basic foodstuffs – nothing canned
• Fuel/illuminating paraffin
• Goods supplied to Industrial
Development Zone
• Services for intellectual property
rights outside SA
• Municipal rates
• Goods supplied to foreign country
but delivered in SA to registered
vendor and used to make taxable
supplies
Deemed supplies: VAT at 14%
• Ceasing to be a vendor (VAT must be
paid at lesser of market or cost of
assets)
• Indemnity payments
• Supplies to independent branches in
the Republic
• Fringe benefits to employees:
o Assets given to employees at
free or low cost
o Right of use of asset
o Services to employee for
private purposes
o Release of employee from
debt
(Input tax: claimable on amounts paid)
Input VAT denied on: nil
• Entertainment
• Club membership fees or
subscriptions
• Motor cars
Imports:
, Customs value XXX
Plus: 10% of customs value XXX x 10%
Plus: Import surcharges and customs
duty paid XXX
Total x 14% (XXX)
Credit note: invoice amount x 14% (XXX)
Second hand goods – deemed input tax at
14/114 if goods were bought from a non-
vendor (XXX)
Bank charges x 14% (XXX)
Fixed property and real rights in fixed
property: 14/114 limited to the transfer
duty amount that was paid (XXX)
Game viewing vehicle or hearse: If vehicle is
converted the taxpayer can claim input VAT
at the time of the conversion less any input
VAT that has already been claimed. (XXX)
If the vehicle is sold then output VAT is
payable on the market value at the time of
the sale XXX
Going concern:
• 95% - 100% taxable use and sold as
going concern 0%
• More than 50% sold as going concern
then all the assets are deemed to be
of going concern 0%
Bad debts (14/114 x
XXX)
Total VAT payable/ claimable: Output
VAT – Input VAT XXX
2. NET NORMAL TAX LIABILITY
Sales Full
Closing stock: valued at lower of cost and
market value Full
(Opening stock: valued at lower of cost
and market value) (Full)
Purchases (Full)
Key man policy (lim: 10% of
employee’s
remuneration)
Learnership agreement: apportioned to
current year of assessment:
• Entering allowance:
o Disability: R50 000 (XXX)
o No disability: R30 000 (XXX)
• Closing allowance:
1. VAT – 14% if amounts exclude VAT; 14/114 if amounts include VAT
a. Compulsory registration: total value of taxable supplies for the
preceding 12 months exceed R1 million
b. Voluntary registration: total taxable supplies for the preceding 12
months exceed R50 000
Output VAT: levied on services rendered by
the taxpayer (on invoice amount, not the
amount received)
Goods supplied or services rendered x 14% XXX
Exempt supplies: nil
• Financial services
• Donated goods
• Residential accommodation
• Commercial property if owned for
less than 28 days (if more than 60
days taxpayer must pay VAT on 60%
of the whole charge, vendor can
claim full input VAT)
• Hire and letting accommodation
• Sale or letting of land outside SA
• Services of body corp when paid for
by levies
• Transporting of fare paying
passengers and their personal items
in taxi or bus
• Educational services by state school
or varsity that is a PBO
• Varsity, school, technikon, or college
fees
• Childcare services by crèche or
aftercare
Fringe benefit: use of MV
Cost (excl VAT) XXX
Consideration: if it is a motor vehicle
as defined, multiply by 0.3%; if it is
not, multiply by 0.6% XXX
(Less) Deductions (XXX)
Multiply by tax fraction (14/114) XXX
Multiply by the percentage of taxable
usage XXX XXX
If it is a motor car as defined, input tax is
denied, if not the employer can claim VAT
paid on the vehicle as an input tax credit
(XXX)
Zero-rated items: XXX x 0%
• Export of moveable goods overseas
, or goods delivered to foreign ship or
plane if for use on ship or plane
• Transport overseas
• Services rendered outside of SA
• Sale of going concern
• Sale of parts of enterprise if can
operate separately and only for going
concern part (must be more than
50% for the purpose of the going
concern)
• Small retailers VAT package
• Goods and services for farming or
agriculture
• Gold coins or Kruger Rands by
Reserve Bank
• Basic foodstuffs – nothing canned
• Fuel/illuminating paraffin
• Goods supplied to Industrial
Development Zone
• Services for intellectual property
rights outside SA
• Municipal rates
• Goods supplied to foreign country
but delivered in SA to registered
vendor and used to make taxable
supplies
Deemed supplies: VAT at 14%
• Ceasing to be a vendor (VAT must be
paid at lesser of market or cost of
assets)
• Indemnity payments
• Supplies to independent branches in
the Republic
• Fringe benefits to employees:
o Assets given to employees at
free or low cost
o Right of use of asset
o Services to employee for
private purposes
o Release of employee from
debt
(Input tax: claimable on amounts paid)
Input VAT denied on: nil
• Entertainment
• Club membership fees or
subscriptions
• Motor cars
Imports:
, Customs value XXX
Plus: 10% of customs value XXX x 10%
Plus: Import surcharges and customs
duty paid XXX
Total x 14% (XXX)
Credit note: invoice amount x 14% (XXX)
Second hand goods – deemed input tax at
14/114 if goods were bought from a non-
vendor (XXX)
Bank charges x 14% (XXX)
Fixed property and real rights in fixed
property: 14/114 limited to the transfer
duty amount that was paid (XXX)
Game viewing vehicle or hearse: If vehicle is
converted the taxpayer can claim input VAT
at the time of the conversion less any input
VAT that has already been claimed. (XXX)
If the vehicle is sold then output VAT is
payable on the market value at the time of
the sale XXX
Going concern:
• 95% - 100% taxable use and sold as
going concern 0%
• More than 50% sold as going concern
then all the assets are deemed to be
of going concern 0%
Bad debts (14/114 x
XXX)
Total VAT payable/ claimable: Output
VAT – Input VAT XXX
2. NET NORMAL TAX LIABILITY
Sales Full
Closing stock: valued at lower of cost and
market value Full
(Opening stock: valued at lower of cost
and market value) (Full)
Purchases (Full)
Key man policy (lim: 10% of
employee’s
remuneration)
Learnership agreement: apportioned to
current year of assessment:
• Entering allowance:
o Disability: R50 000 (XXX)
o No disability: R30 000 (XXX)
• Closing allowance:
