12 October 2015 – From 12 October 2015 SARS implemented system changes which now cater for the proper processing of Collective Investment Scheme (CIS) registrations and VAT Voluntary registrations which made provision for the registration of vendors who have not yet made taxable supplies exceeding R50 000 per year.
In short, voluntary registration for VAT is now allowed for taxable supplies up to R50 000 within 12 months from date of registration;
and reclassification of Category F VAT vendors as Category A or B vendors. See more detail below under ‘When to register’ or see our Guide for the completion of VAT registration application.
When to register?
It is mandatory for a business to register for VAT if the income earned in any consecutive twelve month period exceeded or is likely to exceed R1 million. The business must complete a VAT 101 – Application for Registration form and submit it to the local SARS branch within 21 days from date of exceeding R1 million. A business may also choose to register voluntarily if an applicant wishes to under the new provisions of section 23 (3) (b) (ii) and section 23 (3) (d) of the VAT Act.
From 12 October 2015, the following VAT legislative amendments are applicable:
New VAT Regulations were recently introduced to make provision for the registration of vendors who have not yet made taxable supplies exceeding R50 000 per year.
A person carrying on an enterprise which has not made R50 000 in taxable supplies is allowed to register for VAT, if there is a reasonable expectation to exceed R50 000 in taxable supplies within the 12 month period from date of registration.
In order to register, the person must be able to satisfy SARS that one or more of the following circumstances applies as at date of application for registration:
- In the case of a person who has made taxable supplies for more than 2 months (but not exceeding 11 months), such person must prove that the average value of taxable supplies in the preceding months prior to the date of application for registration exceeded R4 200 per month;
- In the case of a person who has made taxable supplies for only one month preceding the date of application for registration, such person must prove that the value of the taxable supplies made for that month exceeded R4 200;
- In the case of a person who has not made taxable supplies, such person must have a written contract, in terms of which the person is required to make taxable supplies exceeding R50 000 in the 12 months following the date of registration;
- In any other case, the person has entered into a finance agreement with a bank, specified credit provider, designated entity, public authority, non SA resident or any other person who continuously or regularly provides finance, wherein finance has been provided to fund the expenditure incurred or to be incurred in furtherance of the enterprise, and the total repayments in the 12 months following the date of registration will exceed R50 000; or
- In any other case, the person has proof of expenditure incurred or to be incurred in connection with the furtherance of the enterprise as set out in a written agreement or proof of capital goods acquired in connection with the commencement of the enterprise and proof of payment or extended payment agreement evidencing payment has either exceeded R50 000 at the date of application for registration or that will in any consecutive period of 12 months beginning before and ending after the date of application, exceed R50 000; or will in the 12 months following the date of application for registration exceed R50 000.
Nature of Activities
A person may apply to register as a vendor at the time that any goods or services are acquired directly in respect of the commencement of any of the following continuous and regular activities:
- Agriculture, Farming, Forestry and Fisheries
- Ship and aircraft building
- Manufacture or assembly of plant, machinery, motor vehicles or locomotives
- Property development
- Infrastructure development
Reclassification of Category F Vendors
With effect from 1 July 2015, the “Category F” tax period (being periods of 4 months ending June, October and February) was deleted.
In light of this change, SARS has changed existing “Category F” vendors to “Category B” vendors.
Your first “Category B” tax period was for the months of July and August 2015 (VAT return and payment was due in September 2015). Going forward, your tax periods will be periods of two months ending in October, December, February, April, June and August.
Should you wish to change your tax period category from “Category B” to any other applicable tax period you may do so by submitting a written request to your nearest SARS branch.
How to register?
The VAT 101 application for registration must be submitted in person at the SARS branch nearest to the place where your business is situated or carried on. A registered tax practitioner may appear in person on behalf of the applicant. SARS will not accept any faxed or photocopied applications for registration. Posted applications will only be processed if applicants are geographically far from the SARS branch or due to any form of disability and the applicant cannot physically present the application.
All supporting documents must be submitted, otherwise there may be a delay in finalising the VAT registration.
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