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Tax Talk

Tax Talk

Author: Natalie Wocke
Date: 2014-07-04
Vat Input - What you should not claim:

Having dealt with special rules relating to input over the last few articles, we need to balance out the all the good news with some useful and practical information on what you may not claim input vat on.

Incorrect claiming of input is a common error seen in practice, often resulting in costly and unnecessary penalties. In a vat audit situation, you can be sure the following items will be scrutinised, so ensure you are accounting for these correctly.

# Entertainment: No input may be claimed on entertainment expenditure. Entertainment includes the provision of meals, accommodation, beverages, and hospitality of any sort, to anyone in connection with the vendor's enterprise. Interestingly, one may not claim input on any appliances purchased for the purpose of providing entertainment - no input allowed on the office kitchen appliances. (Special rules apply to vendors in the business of supplying entertainment for consideration.)

# Club membership fees and subscriptions: No Input may be claimed on club membership fees of a social, recreational or sporting nature. Input may be claimed on membership fees and subscriptions of a professional nature, for example Law Society membership fees.

# Motor cars: No input may be claimed on motor cars. The term "motor car" is specifically defined in the vat act, and includes a motor car, station wagon, mini bus, double cab LDV and any other motor vehicle normally used on public roads, having 3 or more wheels and constructed/ converted wholly or mainly for the carriage of passengers.

The definition goes on to exclude certain vehicles, on which input may be claimed. These include vehicles accommodating one person, or more than 16 people; unladen vehicles weighing >3,500kg; caravans and ambulances; vehicles constructed for a special purpose other than the carriage of passengers, game viewing vehicles and hearses.

For specific advice in relation to your unique circumstances, contact Roberts and Chaplin on 032 586 0387 (Ballito) or 032 947 1010 (Umhlali).