Vat% on Goods

[|Trix|]

Good day ya'all
Just a topic I would like some answer on.

If I buy a product from a distributor, say for example a camera at R5000 incl Vat, and I would like to resell it as a retailer, must I resell it with VAT included again, say for instance R5000*1.14 = R5700+5%(markup) ?
And the business entity as Sole-Proprietor.
Your help would be appreciated.Thanx

 

[EmileS]

If you're a business, you'll buy the goods from a distributor as excl. VAT, you'll still pay the VAT, but it is tax claimable with SARS. Thus, buy the product as VAT exclusive, add your margin, and then add VAT (which will then still include the VAT for the customer). I stand to be corrected, since I'm not an expert in this, nor do I run a business, but I think this is how it works.

 

[Nick_K]

If your supplier is VAT registered (pretty much all IT distributors are) then you will have to pay them VAT. If you are not registered for VAT (don't have a VAT number) then you may not charge VAT. If you are not VAT registered then you take the price including VAT that you paid and add your markup to that.

 

[AchmatK]

Good day ya'all

Just a topic I would like some answer on.



If I buy a product from a distributor, say for example a camera at R5000 incl Vat, and I would like to resell it as a retailer, must I resell it with VAT included again, say for instance R5000*1.14 = R5700+5%(markup) ?

And the business entity as Sole-Proprietor.

Your help would be appreciated.Thanx

You don't indicate if your business is VAT registered.

If you are VAT registered then your cost price is the excluding VAT amount.

Eg. R5000-VAT charged by distributer+5%+14%=Your selling price

If you are not VAT registered it's simply R5000 + 5%.

You cannot charge VAT if you are not VAT registered.

 

[kayvee]

OP is clearly not VAT registered.

If you want to claim (and charge) the VAT you need to be registered.

Do it.

 

[Other Pineapple Smurf]

Good day ya'all
Just a topic I would like some answer on.

If I buy a product from a distributor, say for example a camera at R5000 incl Vat, and I would like to resell it as a retailer, must I resell it with VAT included again, say for instance R5000*1.14 = R5700+5%(markup) ?
And the business entity as Sole-Proprietor.
Your help would be appreciated.Thanx

Unless your turnover is more than R1 million a year, its not required to register for VAT. Personally its not worth being VAT registered as their is no benefit to you if you're a small business (accounting fees are a killer and we were happy when SARS revoked our VAT status due to our turnover not being high enough)

 

[Freaksta]

Unless your turnover is more than R2 million a year, its not required to register for VAT. Personally its not worth being VAT registered as their is no benefit to you if you're a small business (accounting fees are a killer and we were happy when SARS revoked our VAT status due to our turnover not being high enough)

Isn't it 1mil?

 

[Fulcrum29]

Unless your turnover is more than R2 million a year, its not required to register for VAT. Personally its not worth being VAT registered as their is no benefit to you if you're a small business (accounting fees are a killer and we were happy when SARS revoked our VAT status due to our turnover not being high enough)

No, it is when taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount.

EDIT:

I have also never heard about SARS revoking a business VAT registration, you must apply to cancel your Value Added Tax (VAT) registration if the value of taxable supplies falls below the limit of R1 million, or if all business activities have stopped. The Commissioner will only cancel VAT registration if it is within satisfaction that your taxable supplies do not exceed R1 million or that you have discontinued the business.

In the past you’re External Auditor, Bookkeeper, Accountant or Tax Practitioner would apply to cancel VAT registration, but nowadays it is the person liable for registration which must do it himself, only shareholders, members or owners may be representative.

 

[Other Pineapple Smurf]

No, it is when taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount.

EDIT:

I have also never heard about SARS revoking a business VAT registration, you must apply to cancel your Value Added Tax (VAT) registration if the value of taxable supplies falls below the limit of R1 million, or if all business activities have stopped. The Commissioner will only cancel VAT registration if it is within satisfaction that your taxable supplies do not exceed R1 million or that you have discontinued the business.

In the past you’re External Auditor, Bookkeeper, Accountant or Tax Practitioner would apply to cancel VAT registration, but nowadays it is the person liable for registration which must do it himself, only shareholders, members or owners may be representative.

Oops, typo, yes, its R 1 million.

The deregistration happened a few years back when our small business had a very small turnover. We had the option of challenging it but decided not to. Worked out great in the end as our business is service related. Our net turnover increased overnight by 14% and our clients did not see a cent increases in prices charged.

 

[kayvee]

It does not help in a non-service related company, and the example that the OP cited. It just make your product more expensive as your input costs include 14% VAT.

And if you happen to export your product you get to claim the input VAT without paying out VAT on your invoice value.