VAT Transactions

The VAT section is split into three categories:

  • VAT Returns and Reports
  • VAT Adjustments
  • VAT Payments and Refunds

VAT Returns and Reports

In Sage One Accounting you are required to manage your VAT Returns using the VAT Returns and Reports screen.

To access the VAT Returns and Reports screen, click on the Accountant’s Area…VATVAT Returns and Reports menu option.

Click on the Next button to continue.

Enter your Company VAT Number.

Each VAT period requires a submission and typically ends on the last day of the month with the submission typically due on the 25th of the following month. Enter your last VAT Period End Date and your last VAT Submission Due Date. We will use these dates to determine your next VAT Period End Date and when your next VAT return is due.

Click on the Next button:

Click on the Finish button.

Purpose of the VAT Returns and Reports Screen:

VAT is a strictly regulated area of any business and keeping your figures accurate, reliable and up to date is essential to avoid issues with the authorities. With the VAT Returns and Reports screen you will be able to control all of your VAT reporting from one central place.

Your VAT reporting does not always correlate to your financial reporting. Sometimes you will record transactions in one month and only account for the VAT in another month, this can often happen if you are behind on your processing.

With the VAT Returns and Reports Screen you will assigning transactions to particular VAT periods, and not specific date ranges.

Benefits of VAT Periods:

  • These should agree to what you actually submit to your local revenue authority.
  • Amounts owing should agree with the VAT payments that you have made.
  • No editing of transactions that have been submitted to the Revenue Authority.
  • Back dated transactions will pull through to the current VAT Period (i.e. no missing of VAT Transactions).

The screen will display a list of all of your VAT Periods detailing relevant information pertaining to each period:

  • VAT payable or refundable for the period
  • Associated payments and refunds made for each period
  • Quick links to the VAT 201 and VAT Report relevant to that period

The following screen will be displayed:

The table below will explain all the fields on the screen above:

Field Explanation
Close VAT Period If you select the Close VAT Period button, Sage One Accounting will close off the current VAT period that you are working in and move over to the next VAT period.
Reopen (a previous VAT Period) Reopening a VAT return should only be done if your intention is to resubmit your VAT to your revenue authority. For Example: All transactions in the VAT return for 12/2013 will be unmarked as finalised and you will be able to edit these transactions. Any transactions that have been back dated prior to and including 31/12/2013 and that have not been included in any other VAT return will be included in the 12/2013 VAT return once you close this VAT period.
Start Over? If you select this option, all of your VAT Returns will be removed and you will have to set it up again. The values for each return may differ to the actual returns you have submitted to your revenue authority. Please be careful before selecting this option. Consult with your financial practitioner.
View (Previous VAT 201 Calculation) This option allows you to view the VAT 201 Calculation report for a previous VAT Period.
View (Previous VAT Report) This option allows you to view the VAT report for a previous VAT Period.
Payment/Refund You can allocate your VAT Return amounts to the correct VAT period by selecting the Link Payment and Link Refund option.

You will also have access to your standard VAT Reports via the Reports button:

VAT Adjustments

In the VAT Adjustments screen, you are able to adjust either the input or output VAT (explained earlier in the manual).

You can make adjustments to the amount of VAT that you owe or are owed. You should therefore be certain of the amount you enter. All VAT adjustments will be included on the VAT Report.

You will need to specify whether the adjustment you are processing will affect Input VAT or Output VAT.

The following table will help you remember when input and output VAT applies:

VAT Type Explanation
Output VAT If you sell items to customers, which means items (stock) are leaving your business, it is referred to as output VAT.
Input VAT If you buy items from your suppliers, which mean you are receiving items (stock) into your business for resale or business use, it is referred to as input VAT.

Your accountant will process the required tax adjustments for your business.

  • Select the Accountants Area…VAT Adjustments menu option.
  • The following screen will be displayed:

VAT Payments and Refunds

VAT reports must be submitted to your local VAT authority on a regular basis, and will either indicate that you need to pay VAT over or receive a refund.

Since the VAT laws of your country govern VAT processing, it is of extreme importance to ensure that you process the adjustments, payments and refunds correctly.

Sage One Accounting will calculate your VAT for you as shown below. Your Input VAT is calculated by establishing the VAT included on all purchases – item and non-item based – that you have processed in Sage One Accounting. Next, your Output VAT is calculated by establishing the VAT included in all of the sales – item and non-item based – that you have processed in Sage One Accounting. The difference between the two is the amount of VAT that you owe. If your input VAT is higher than your output VAT, you will be due a VAT refund.

You can process VAT payments and refunds that will automatically create a payment or receipt to your selected bank account.
You will see a VAT summary for the date range you have selected. To view any payments or refunds already processed print the VAT Payments and Refunds report. Any payment or refund processed in the date range you have selected will be excluded from this summary as they are considered to be payments or refunds pertaining to a previous VAT period.

In the Details screen, you will edit the date for the transaction and the bank account that will be affected. You will then enter the Reference and Description for the transaction. You are able to edit the value of the amount in the Detail section of the screen; however, this is not recommended.

To process the VAT Payment, click the Finish button.

The Different VAT Types

The supply of all goods and services attract VAT (standard rated supplies) unless the goods or services are zero-rated or VAT exempt. Certain goods and services attract VAT, but the purchaser is not allowed to claim the VAT input.

Standard Rated Supplies

A standard-rated supply is a supply of goods or services, which is subject to VAT at the rate of 14%. The supply of all goods and services are taxable at the standard rate, unless it is specifically zero-rated in terms of section 11, or exempt in terms of section 12 of the VAT Act.

The following are some examples of standard-rated supplies (the list is not exhaustive):

  • Land and buildings (fixed property) – commercial or residential property bought from property developers, building materials, vacant land bought from a vendor etc.
  • Fees for professional services – construction/building, estate agents, consultants, architects, engineers, project managers, doctors, private hospital services, lawyers, plumbers, electricians and accountants.
  • Household consumables and durable goods – most grocery items and foodstuffs such as meat, fish, white bread, snacks, most canned foods, cigarettes, perfume, medicines, cool drinks, cleaning materials, clothing, footwear, microwave ovens and other household consumables and appliances.
  • Municipal goods and services such as the supply of electricity, water and refuse removal.
  • Accommodation, hospitality, tourism and entertainment – restaurant meals, hotel accommodation, liquor sales, arcade amusements, casino slot machines and gambling services, entrance fees to sporting events, theatre performances and film shows, guided tours, game drives and game hunting expeditions.
  • Capital assets such as furniture, production machinery, installations, motor vehicles and equipment.
  • Local transport of goods (all modes of transport) and transport of passengers by air or sea.
  • Telephone, internet, computer and other telecommunication services.
  • Rental of goods and commercial property such as office space.
  • Motor vehicles, repair services, lubrication oils and spare parts.

When a standard rated supply is made, VAT (output VAT) must be charged at the prescribed rate (currently 14%) and input VAT may be deducted on any goods or services acquired in the course of making those taxable supplies. The net VAT due by a vendor is calculated by subtracting the input VAT incurred from the output VAT charged during the VAT period.

Zero Rated Supply

Zero-rated supplies are taxable supplies on which VAT is levied at a rate of 0%. The application of the zero rate must be supported by documentary proof acceptable to the Commissioner.

Some examples of zero-rated supplies are briefly explained below:

Certain basic foodstuffs

Certain basic foodstuffs are zero-rated, provided it is not supplied for immediate consumption (that is, as a meal or refreshment) or added to a standard-rated supply.

These include the following:

  • brown bread
  • dried mealies and mealie rice
  • brown bread flour (excluding wheaten bran)
  • samp
  • hens eggs (that is, not from ostriches, ducks etc.)
  • fresh fruit and vegetables
  • dried beans
  • lentils
  • maize meal
  • rice
  • pilchards in tins or cans
  • vegetable cooking oil (excluding olive oil)
  • milk, cultured milk, milk powder and dairy powder blend edible legumes and pulses of leguminous plants (that is, peas, beans, peanuts etc.)

The zero rate will not apply where:

  • Zero-rated foodstuffs are prepared for immediate consumption, for example:
    • a glass of milk served in a restaurant;
    • salad or fruit salad which is ready to eat; and
    • sandwiches and other take-away foods.
  • A standard rated product or ingredient is supplied together with a zero-rated foodstuff, for example:
    • a pack of vegetables containing a pack of flavoured butter;
    • a pack of rice or beans containing a sachet of flavouring;
    • a gift hamper consisting of a basket of fruit;
    • flavoured cooking oil; and
    • a pack of salad to which salad dressing has been added.

Fuel levy goods

Most motor fuels are subject to taxes such as the General Fuel Levy, the Road Accident Fund Levy as well as Excise duty. The VAT Act therefore provides that certain specified “fuel levy goods” are subject to the zero rate. These include crude oil and certain petrol and diesel based products, which are used as fuel in internal combustion engines.

Examples include:

Fuels used in motor cars, trucks, buses, ships, fishing boats, railway locomotives, farming and production machinery.

Petroleum oils and crude oil, which are refined for the production of fuel levy goods, are also zero-rated; however, aviation kerosene, motor oil, and oil lubricants are subject to the standard rate.

Exports

The direct export of goods may be zero-rated. In certain instances, the indirect export of goods may also qualify for the zero rate. In both cases, certain documentary and other requirements must be met to support the application of the zero rate.

Services physically performed outside the Republic

The supply of services physically rendered or performed outside the RSA qualifies for the zero rate. This provision will apply to both residents and non-residents.

For example, if a South African vendor constructs a building in Botswana for a RSA resident, those services are subject to VAT at the zero rate. This provision applies to services physically performed for a vendor in a customs controlled area.

Exempt Supplies

Exempt supplies are supplies of goods or services where VAT is not chargeable at either the standard rate or the zero rate and will not form part of taxable turnover. If a person makes only exempt supplies, that person cannot register as a vendor or charge VAT on those supplies. Accordingly, any VAT incurred to make exempt supplies may not be deducted as input VAT.

Some examples of exempt supplies include:

  • financial services (such as, interest earned for the provision of credit, life insurance, the services of benefit funds such as medical schemes, provident, pension and retirement annuity funds);
  • donated goods or services sold by non-profit bodies (such as, religious and welfare organisations);
  • residential accommodation in a dwelling (but not holiday accommodation);
  • passenger transport in South Africa by taxi, bus, or train;
  • educational services provided by recognised educational institutions such as, primary and secondary schools, technical colleges, or universities which have been approved as public benefit organisations; and
  • childcare services provided at crèches and after-school care centres.

Note that generally the liability to register for VAT does not depend on the status of the organisation itself, but rather on the type of supplies made. There is, however, an exception, which is applied in the case of public authorities.

Non-allowable items

Sometimes, although the Vendor charged VAT output, the subsequent acquirer of the goods or service may not claim VAT input on them.
Some of these products/services include:

  • Entertainment expenditure: Entertainment expenditure includes staff refreshments and other goods bought for the purposes of entertainment. SARS does not regard such items as necessities in producing VAT liable outputs, thus no VAT input claim will be allowed. There are exceptions to this rule, though: If the owner or an employee of a company is away on a business trip, then VAT input may be claimed on the hotel bill if the person stays over at the hotel for at least one night.
  • Passenger vehicles: However companies makes use of sedan vehicles and can prove that this type of vehicle is crucial to the nature of its business, it may apply for a special concession. If adequate proof is supplied, the company may be granted a proportional claim by SARS.
  • Club fees and subscriptions (with the exception of professional subscription fees in the case where a license is needed to trade).

The VAT 201 Calculation Report

Introduction

The VAT 201 return is a declaration, which you need to make at the end of every tax period if you are a vendor, which reflects the VAT that you have charged on supplies, or for which you are liable to declare output tax, and the amounts that you believe you are entitled to deduct as input tax.

The difference between these amounts for that specific tax period could either result in you having to pay the difference to SARS, or you would be entitled to a refund of the difference.

If you are registered for VAT, you must submit your return by the due date, even if there is no payment required for the tax period.

VAT 201 Calculation Report

To access the VAT 201 Calculation report, select the Reports menu, followed by the VAT option. You will be redirected to the VAT Returns and Reports screen. Click on the Reports drop down and select the VAT 201 Calculation Report option.

The screen above will be displayed the first time you access this report.

The Sage One VAT 201 Calculation Report will assist you with the completion of your VAT 201 return. Please check the following before submitting your VAT return:

  • The correct date ranges have been selected for the VAT Period you are submitting your VAT return for.
  • All transactions for the VAT period concerned have been processed.
  • All transactions have been assigned to the correct VAT types.
    Click on the Next button to continue.

Select the VAT Period End Date and the Date Range that must be displayed in the report.

If you want to include VAT adjustments on the report, check the Include VAT Adjustments check box.

Check the Offset Credit in Sales / Purchases check box to offset credits against sales or purchases. Uncheck the check box to show these separately.

Click on the Next button to select your VAT Allocations / VAT Types.

VAT Allocations

You will use the VAT allocations list to determine which VAT types in Sage One Accounting relate to which VAT Codes on the VAT 201 submission form.

Select the VAT Allocations button. The following screen will display:

Select the correct VAT type against the correct VAT code from the VAT Type in Sage One Accounting drop down menu.

Click on the View Report button to view the report.

The figures that display in this report are a guide only and should be checked carefully.

This report serves as an aid for completing your actual VAT 201 Return and cannot be submitted to SARS.

To see the different explanations of VAT Types, please refer to the VAT Types section above.

View Audit Report

You can drill down from your VAT 201 to the new VAT Audit Report to view transactions per VAT code.

VAT Reports

VAT Report

A VAT report lists VAT transactions for reporting purposes. This report is also available in the Reports menu. You have the option to print the report in detail or in summary, with or without VAT adjustments. You can also include payments and/or refunds in the report. You can set if the report must offset all the credits on sales or purchases.

Each VAT Report can be run either by VAT Period or by a selected Date Range.

You have the selection to preview the report as monthly, quarterly, yearly, month to date, quarter to date, year to date, life to date, custom to date, last month, last quarter and last year. If you select the custom dates option, you can select the date ranges from the calendar look up fields.

Check the Offset Credits on Sales / Purchases check box to offset credits against sales or purchases. Uncheck the check box to show these separately. This option only applies to customer and supplier credit transactions.

VAT Audit Report

This report lists all of the original Customer Tax Invoices and Credit Notes that were emailed and marked as Computer Generated.

Each VAT Report can be run either by VAT Period or by a selected Date Range.

VAT Payments and Refunds Report

This lists the payments made and refunds received from the revenue service.

Each VAT Report can be run either by VAT Period or by a selected Date Range.

VAT Summary Report

This report gives you an overview of your VAT position either per period or per month.

Each VAT Report can be run either by VAT Period or by a selected Date Range.

VAT Transactions Report

This is a detailed report showing the transactions making up your VAT Payable balance.

Each VAT Report can be run either by VAT Period or by a selected Date Range.