SOLUTION TO QUESTION 1 Oct/Nov 2016
Part A
Mashadi-Edu
VAT Payable/refundable 31 January 2016 (2 month period)
VAT Output
Sales - direct export zero rated -
Local sales - 1 785 000 x 15/115 232 826
Creche fees - exempt -
232 826
VAT Input
Purchases (337 300 x 15%) 50 595
Purchase of second hand goods, timing only upon payment
(40 000 x 15/115) 5 217
Salaries - not carrying on an enterprise -
Fuel - zero rated -
Entertainment of clients - Vat denied -
Marketing - 20000x14/115 2 609
Rental amount 50 000 x15/115 x 90% x 2 11 739
Cleaning services 8 400 x15% x 90% 1 134
New computers ((4 400 x 3 x 12)-13 800)x15/115 18 861
Total Vat output 71 294
Vat payable (Vat output less Vat input) 161 532
Part b
The requirements of a going concern are:
1. Seller must be VAT vendor.
2. Purchase must be VAT vendor.
3. All assets necessary for going concern must be supplied.
4. Tax invoice must have VAT at 0%.
5. Agreement must state VAT at 0%.
6. Agreement must state going concern sale.
7. The operation must be an income earning activity on date of transfer.
Part A
Mashadi-Edu
VAT Payable/refundable 31 January 2016 (2 month period)
VAT Output
Sales - direct export zero rated -
Local sales - 1 785 000 x 15/115 232 826
Creche fees - exempt -
232 826
VAT Input
Purchases (337 300 x 15%) 50 595
Purchase of second hand goods, timing only upon payment
(40 000 x 15/115) 5 217
Salaries - not carrying on an enterprise -
Fuel - zero rated -
Entertainment of clients - Vat denied -
Marketing - 20000x14/115 2 609
Rental amount 50 000 x15/115 x 90% x 2 11 739
Cleaning services 8 400 x15% x 90% 1 134
New computers ((4 400 x 3 x 12)-13 800)x15/115 18 861
Total Vat output 71 294
Vat payable (Vat output less Vat input) 161 532
Part b
The requirements of a going concern are:
1. Seller must be VAT vendor.
2. Purchase must be VAT vendor.
3. All assets necessary for going concern must be supplied.
4. Tax invoice must have VAT at 0%.
5. Agreement must state VAT at 0%.
6. Agreement must state going concern sale.
7. The operation must be an income earning activity on date of transfer.
