MaxKnowledge — Knowledge base — VARIED INPUT BASED METHOD FINAL-converted

VARIED INPUT BASED METHOD FINAL-converted

Whefe:

y = the apportionment percentage.

a = the valve of taxable Supp\iw \›nCtuding deemedsupp|ies) Made during the period.

b = the value of all exempt supplies made during the period.

c = the sum of any olher amoume not included in 'a' or b' iñ the form, whhh wwe iuceived or

which were accrued duri thai period (whether in respect of a suPply or not).

The foliovring amoLlr ts must be excluded from lhe caJcuJation of thisratio

agfe9TI\end qr Operating )eaSe; and

the vahe of supply of capital gooos or services other than gOOds supplied under a rental

the value of any goods Oy (see 10.5).

services supplied for whiCh an inp'ut tdx deducted denied

It should be r\ated \hzt '*' !n the above forrriula is not restricted to supplies made during the

per!od but includes 'any amountsreceived or accrued'. This would inchde items such as divi- dends and such Inclusion could hsve a significant impact on a vendor's ratio. Any vendor seeking to exclude dividends on me basis that Irmited infrastructureis e toyed to generate such income will be obliged to apply to SARS for a bJnding ruJing to that 9tfect.

A vendor may at his option base the rat to on amounts pertaining to Ihe previous financial year

instead oi lhe amounts for the month in question. Jn such casa be must ensu e that such ratio is con•stent\y app\\ed unti] the end of the current financial year, at which time new ratios should be

calculated. Any resulting adjUstmgnts shouJd be made within the three monlhs afler the financial year end.

Where the audited financial statements are not avaiJable the adjustment must be Dased on the

year end trial balance with a final adjustment being made when the aodifed financial staiemenis beco

ut-based method

The varied input based mathod varies from the original input based method which was used as a standard method prior tO 2000 in that th e VAT incurred on mixed supplies is now exe\uded \‹om we denominator. Jn terms of this method. the portion representing the taxable use of the goods or services is calculated by uslng the ratio of VAT incurred on goods or services acquired wholly in order to make taxable supplies, to the total VAT incurred on the acquisition of all goods and sen/ices during the tax petiod \excluding the VAT in Curred for the purposes of making both taxable and exempt slJppIies). The following amounts should bo excluded from both the numera- tor and the denominator in calculating tho ratio

VAT incurred on capital g¢ods or sarviaes (Qtr than goods acqu\ ed 1or suppty under a rental agreement) ”

VAT incurred on good s or services in respect of which an input tax deduction is always denoteee 10.5).

F-of exampJe. assume that during B tax period a vendor acquires goods (for R T00 OOD + R14 000 VAT), which are to be used for making both taxable and exempt supplies. The taxable us9 of such goods is not estimated to exceed 959 of theiF total usage. The foJlowing is s breakdawr‹ of

the total VAT incurred durin g the tax perio

Wholly for making taxable supplies Molly for mak ng exem t su lies Pa£tia\\y for making |i Acgu on of cap

40 D00

20 OGO

14000

500flO

ab.e supplies

Acquisition of goods or services

-'ed

for yyhlCh an input tax deduction is de-

30000