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Purchases (R 10 556.00 x 14/114) – Purchases of inventory from a VAT vendor is a standard rated supply. R 1 296.35
Office refreshments - (Although this may have been purchased from a VAT vendor and VAT paid, it may not be regarded as VAT input because it is a non-allowable item)
0.00
Rent paid (R 4 855.76 x 14/114) - This is a standard rated supply and will be deductible as VAT input if the invoice is a tax invoice.
596.32
Licence for motor vehicle (This is an exempt supply) 0.00
Property tax (Property taxes are a tax in themselves and therefore do not attract VAT and is therefore an Exempt supply)
0.00
Amenities (R 475.02 x 14/114) – Amenities such as water, refuge and electricity are standard rated supplies and therefore deductible if supplied by a registered VAT vendor
58.34
Diesel (zero-rated supply) 0.00
Postage and stationery (for business use) (R 306.12 x 14/114) – A standard rated supply. 37.59
Wages (not a supply of goods or services) 0.00
Printing equipment (R 36 946.00 x 14/114) – Printing equipment is a capital asset that will be used in the production of income and therefore VAT input may be claimed.
4 537.23
Pool table for staff room (Although the pool table may have been supplied by a VAT vendor and thus VAT paid, it may not be deducted because the asset is not used in the production of income and is therefore a non-allowable item)
0.00
Telephone (R 1 583.40 x 14/114) – The telephone account is a standard rated supply. 194.45
VAT for November/December 20.8 (not a supply of goods or services) – This is a payment. No goods or services have been supplied.
0.00
Repayment to creditor (not a supply of goods or services) – This is a payment. No goods or services have been supplied. Remember: the business is registered on the invoice basis.
0.00
Plumbing services (not a VAT vendor) – Although an invoice for plumbing services would constitute a standard rated supply, the supplier of the service in this instance is not a registered VAT vendor and would thus not have supplied a tax invoice.
0.00
Bank charges (R 240.40 x 14/114) – Bank charges are a standard rated supply. – The bank statement serves as the tax invoice.
29.52
Stop order for short term insurance on delivery vehicle (R 1 881.36 x 14/114). Short term insurance premiums do constitute standard rated supplies and thus the business can claim VAT input.
231.04
Interest on overdraft (All interest are VAT exempt supplies) 0.00
Credit losses written off (R 209.04 x 14/114) – Credit losses are a standard rated supply. 25.67
Credit notes issued (R 156.78 x 14/114) – Just as VAT output will be charged to a client on the sale of goods or services, so VAT input must be recorded upon the return of such goods or services.
19.25
Total input VAT – The sum of all the VAT input amounts. R 7 025.76
VAT input on VAT 201
Capital goods or services: Printing equipment. The VAT input on capital (asset) amounts is disclosed separately in Block 14 of the VAT 201.
R 4 537.23
Other goods or services (R 1 296.35 + R 596.32 + R 58.34 + R 37.59 + R 194.45 + R 29.52 + R 231.04). This figure is included in block 15.
2 443.61
Credit losses are disclosed separately in block 17 25.67
Other: Credit notes issued. – The credit notes are also disclosed separately under ‘other’ in block 18. 19.25
The total VAT input amount is summed in block 19 R 7 025.76
Cash sales (R 80 225.60 x 14/114) – Sales of inventory by a VAT vendor are standard rated supplies. R 9 852.27
Exports (Goods or services sold in foreign countries are zero-rated supplies) 0.00
Credit sales (R 3 483.48 x 14/114) – When accounting for VAT on the invoice basis VAT output is charged when the tax invoice is issued and not when the amount owing is received.
R 427.80
Receipt from a debtor (not a supply of goods or services) – This is a receipt. VAT would have been recorded when the goods or services were sold and the tax invoice issued.
0.00
Interest on overdue debtors account – Interest is always a VAT exempt supply as it is regarded as a supply of financial services.
0.00
Editing fees (R 2 322.32 x 14/114) – This is a sale of services and therefore a standard rated supply. 285.20
Old delivery vehicle (R 11 400.48 x 14/114) – The purchase of the delivery vehicle would have resulted in a Vat input being paid, thus the sale of the capital asset must include VAT output. – This is a standard rated supply.
1 400.06
Insurance payout on an accident damaged delivery vehicle (R 9 500.40 x 14/114) – Just as VAT input can be claimed on the short term insurance premiums, so VAT output is charged on a pay out from such insurance.
1 166.72
Total output VAT – The sum of all the VAT output amounts. *R 13 132.05
VAT output on VAT 201 Supply VAT
Standard rated supplies excl. capital goods (R 80 225.60 + R 3 483.48 + R 2 322.32) – Block 1 must contain the VAT output on standard rated supplies excluding capital goods and/or services. The VAT on such supply is then inserted in block 4.
R 86 031.40 R 10 565.26
Standard rated supplies on capital goods. – The supply total for capital goods or services is included in block 1A and the VAT output on such supplies in included in block 4A.
R 11 400.48 R 1 400.06
Adjustments: Insurance payout on an accident damaged delivery vehicle. Insurance payouts are disclosed separately under ‘Other’ in block 12.
R 9 500.40 R 1 166.72
The total VAT output amount is summed in block 13 *R 13 132.04
Total VAT payable (R 13 132.04 - R 7 025.76) – This is the amount in block 20. R 6 106.28
* Please note: Minor rounding errors will occur.
The completed VAT return is included on the following page:
You have been provided with the following information for HD Audio CC for the month of May 2010.
May 2010 Age Salary Travel
allowance Commission
Taxable portion of
travel allowance
Taxable value of company
car
Taxable portion of
medical aid
Pension fund deduction
PAYE/SDL
remuneration
UIF remuneration
PAYE
deduction
Oliver 33 R 5 820.00 R 1 164.00 R 0.00 ? R 0.00 ? ? ? ? ? Stander 45 R 32 011.00 R 8 003.00 R 4 321.00 ? R 0.00 ? ? ? ? ? Novak 22 R 17 461.00 R 0.00 R 0.00 R 0.00 R 0.00 ? ? ? ? ? Oscar 66 R 20 371.00 R 3 667.00 R 2 546.00 ? R 0.00 ? ? ? ? ? Charlie 64 R 6 693.00 R 0.00 R 569.00 R 0.00 ? ? ? ? ? ? Bravo 25 R 6 693.00 n/a n/a n/a n/a n/a n/a ? ? ? Echo 45 R 7 275.00 n/a n/a n/a n/a n/a n/a ? ? ?
Totals R 96 324.00 R 12 834.00 R 7 436.00 R 10
267.20 R 3
728.07 R 2 805.19 R 6 176.72 R 114 383.74 R 61 432.43 R 23 585.26
Additional information:
1. The following tax sliding scale for individuals applied for the year ended 28 February 2011:
TAXABLE INCOME RATES OF TAX
R R R R
0 — 140 000 18% of every R1
140 001 — 221 000 25 200 + 25% of the amount over 140 000
221 001 — 305 000 45 450 + 30% of the amount over 221 000
305 001 — 431 000 70 650 + 35% of the amount over 305 000
431 001 — 552 000 114 750 + 38% of the amount over 431 000
552 001 and over 160 730 + 40% of the amount over 552 000
2. Both Novak and Oscar receive a 13th cheque. The business ‘smoothes’ the tax on the bonus
throughout the year. 3. Charlie has the full use of a company car. This car (a delivery vehicle) had cost the business
R 170 000.00 (including VAT) when it was bought and allocated to him last year. Car allowances are taxed at 2.50% p.m. on cost.
4. Permanent employees contribute 7.50% of their basic salary to the Old Pension Fund (13th
cheques are also pensionable). SA Trading CC contributes to the pension fund on a rand-for-rand basis.
5. Bravo and Echo are part time employees that worked for 25 and 18 hours for the month respectively.
6. Employees are not entitled to housing, cellphone or computer allowances. 7. There are no independent contractors or employees on registered learnerships. 8. Only 80.00% of the travel allowance is taxable 9. Assume a maximum UIF funding salary of R 12 478.00. 10. All permanent employees belong to the Strong Health Scheme, a registered medical scheme and
have all provided adequate proof of membership to their employer. The company pays the whole contribution to the medical aid. The following tax concessions apply to medical fund contributions:
R 670.00 for the sole member.
R 670.00 for the first additional dependant.
An additional R 410.00 is allowed as a deduction per additional dependant other than the first dependant. All contributions paid for an employee aged 65 or older are allowed as a deduction.
11. The staff members have the following number of dependants and medical aid contributions:
Employee No. of
dependants Total monthly contribution paid to
medical aid
Oliver 1 R 698.40
Stander 2 R 3 841.32
Novak 1 R 1 920.71
Oscar 4 R 3 259.36
Charlie 0 R 803.16
12. The rebates allowed in the South African tax system are as follows for the 2010/2011 tax year:
Primary rebate R 10 260.00
Secondary rebate R 5 675.00
Required:
(a) Complete the table provided in your answer book. Make use of the sliding scale schedule. (b) Complete the abbreviated EMP201 in your answer book.