Value-Added Tax Act, 1991

Jurisdiction: South Africa
Citation: Act 89 of 1991
Date: 12 June 1991
Language: English
Type: Legislation
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Taxonomies

South Africa

Value-Added Tax Act, 1991

Act 89 of 1991

Published in Government Gazette 13307 on 12 June 1991
Assented to on 5 June 1991
Commenced on 30 September 1991
[This is the version of this document from 12 June 1991.]

(English text signed by the State President.)ACTTo provide for taxation in respect of the supply of goods and services and the importation of goods; to amend the Transfer Duty Act, 1949, so as to provide for an exemption; to amend the Stamp Duties Act, 1968, so as to provide for an exemption from stamp duty and to discontinue the levying of certain stamp duties; to repeal the Sales Tax Act, 1978; and to provide for matters connected therewith.BE IT ENACTED by the State President and the Parliament of the Republic of South Africa, as follows:—

1. Definitions

In this Act, unless the context otherwise indicates—"ancillary transport services" means stevedoring services, lashing and securing services, cargo inspection services, preparation of customs documentation, container handling services and storage of transported goods or goods to be transported;"association not for gain" means—(a)any religious institution of a public character; or(b)any other society, association or organization, whether incorporated or not, which—(i)is carried on otherwise than for the purposes of profit or gain to any proprietor, member or shareholder; and(ii)is, in terms of its memorandum, articles of association, rules or other document constituting or governing the activities of that society, association or organization, required to utilize any property or income solely in the furtherance of its aims and objects and is prohibited from transferring any portion thereof directly or indirectly in any manner whatsoever so as to profit any person other than by way of the payment in good faith of reasonable remuneration to any officer or employee of the society, association or organization for any services actually rendered to such society, association or organization, and upon the winding-up or liquidation of such society, association or organization it will be obliged to give or transfer its assets remaining after the satisfaction of its liabilities to some other society, association or organization with objects similar to those of the said society, association or organization;"business day" means any day which is not a Saturday, Sunday or public holiday;"cash value", in relation to the supply of goods supplied under an instalment credit agreement, means—(a)where the seller or lessor is a banker or financier, an amount equal to or exceeding the sum of the cost to the banker or financier of the goods, including any cost of erection, construction, assembly or installation of the goods borne by the banker or financier and the tax leviable under section 7(1)(a) in respect of such supply by the banker or financier; or(b)where the seller or lessor is a dealer, an amount equal to or exceeding the price (including tax) at which the goods are normally sold by him for cash or may normally be acquired from him for cash (including tax) and any charge (including tax) made by the seller or lessor in respect of the erection, construction, assembly or installation of the goods if such charge is financed by the seller or lessor under the instalment credit agreement;"close corporation" means a close corporation within the meaning of the Close Corporations Act, 1984 (Act No. 69 of 1984);"commencement date" means the date fixed by the Minister by notice in the Gazette;"commercial rental establishment" means—(a)the business of any hotel, motel, inn, boarding house, hostel or similar establishment in which lodging is regularly or normally provided to five or more persons at a daily, weekly, monthly or other periodic charge; or(b)any business undertaking (not being any business referred to in paragraph (a)) in the course of which accommodation in any house, flat, apartment, room, caravan or houseboat or on any caravan or camping site is regularly or systematically let or held for letting by that undertaking for continuous periods not exceeding 45 days in the case of each occupant, if the total annual receipts and accruals from the supply of domestic goods and services in the course of carrying on such business undertaking have exceeded R24 000 or there are reasonable grounds for believing that such total annual receipts and accruals will exceed that amount; or(c)any hospital, nursing home, hospice, convalescent home or rest home,but does not include—(i)any boarding establishment or hostel operated by any employer solely or mainly for the benefit of the employees of such employer or of a connected person in relation to such employer or of their dependants, provided such establishment or hostel is not operated for the purpose of making profits from such establishment or hostel for the employer or such connected person;(ii)any boarding establishment or hostel operated by any local authority otherwise than for the purpose of making profits from such establishment or hostel;"Commissioner" means the Commissioner for Inland Revenue;"company" means a company as defined in section 1 of the Income Tax Act;"connected persons" means—(a)any natural person and—(i)any relative of that natural person (being a relative as defined in section 1 of the Income Tax Act); or(ii)any trust fund in respect of which any such relative is or may be a beneficiary; or(b)any trust fund and any person who is or may be a beneficiary in respect of that fund; or(c)any partnership or close corporation and—(i)any member thereof; or(ii)any other person where that person and a member of such partnership or close corporation, as the case may be, are connected persons in terms of this definition; or(d)any company (other than a close corporation) and—(i)any person (other than a company) where that person, his spouse or minor child or any trust fund in respect of which that person, his spouse or minor child is or may be a beneficiary, is separately interested or two or more of them are in the aggregate interested in 10 per cent or more of the company’s paid-up capital or 10 per cent or more of the company’s equity share capital (as defined in section 1 of the Income Tax Act) or 10 per cent or more of the voting rights of the shareholders of the company, whether directly or indirectly; or(ii)any other company the shareholders in which (being shareholders as contemplated in the definition of "shareholder" in section 1 of the Income Tax Act) are substantially the same persons as the shareholders in the first-mentioned company, or which is controlled by the same persons who control the first-mentioned company; or(iii)any person where that person and the person referred to in subparagraph (i) or his spouse or minor child or the trust fund referred to in that subparagraph or the other company referred to in subparagraph (ii) are connected persons in terms of this definition; or(e)any separate enterprise, branch or division of a vendor which is separately registered as a vendor under the provisions of section 50 and any other such enterprise, branch or division of the vendor; or(f)any branch, division or separate enterprise of an association not for gain which is deemed by subsection (5) of section 23 to be a separate person for the purposes of that section and any other branch, division or separate enterprise of that association, whether or not such other branch, division or separate enterprise is a vendor;"consideration", in relation to the supply of goods or services to any person, includes any payment made or to be made (including any deposit on any returnable container and tax), whether in money or otherwise, or any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of any goods or services, whether by that person or by any other person, but does not include any payment made by any person as an unconditional gift to any association not for gain: Provided that a deposit (other than a deposit on a returnable container), whether refundable or not, given in respect of a supply of goods or services shall not be considered as payment made for the supply unless and until the supplier applies the deposit as consideration for the supply or such deposit is forfeited;"consideration in money" includes consideration expressed as an amount of money;"Customs and Excise Act" means the Customs and Excise Act, 1964 (Act No. 91 of 1964);"domestic goods and services" means the provision to a natural person of the right to occupy for residential purposes the whole or part of the accommodation provided in any commercial rental establishment, including, where it is provided as part of the right of occupation, the provision of—(a)cleaning and maintenance;(b)electricity, gas, air conditioning or heating;(c)a telephone, television set, radio or other similar article;"donated goods or services" means goods or services which are donated to an association not for gain and are intended for use in the carrying on or carrying out of the purposes of that association;"dwelling" means any building, premises, structure or any other plate, or any part thereof, used predominantly as a place of residence or abode of any natural person, together with any appurtenances belonging thereto and enjoyed therewith, but does not include any accommodation in or intended to be used in a commercial rental establishment;"enterprise" means—(a)any enterprise or activity which is carried on continuously or regularly by any person in the Republic or partly in the Republic and in the course or furtherance of which goods or services are supplied to any other person for a consideration, whether or not for profit, including any enterprise or activity carried on in the form of a commercial, financial, industrial, mining, fanning, fishing or professional concern or any other concern of a continuing nature or in the form of an association or club;(b)without limiting the generality of paragraph (a)—(i)the making of supplies by any public authority of goods or services which the Treasury, after consultation with the Commissioner, is satisfied are of the same kind or are similar to taxable supplies of goods or services which are or might be made by any person other than such public authority in the course or furtherance of any enterprise, if the Treasury has notified such public authority that its supplies of such goods or services are to be treated as supplies made in the course or furtherance of an enterprise;(ii)the activities of any local authority;(iii)the activities of any welfare organization as respects activities referred to in the definition of "welfare organization" in this section:Provided that—(i)anything done in connection with the commencement or termination of any such enterprise or activity shall be deemed to be done in the course or furtherance of that enterprise or activity;(ii)the supply outside the Republic of goods or services by any concern from any branch thereof which is permanently located at premises outside the Republic shall not be deemed to be effected in the course or furtherance of any enterprise or activity carried on by such concern, if—(aa)the branch can be separately identified; and(bb)an independent system of accounting is maintained by the concern in respect of the branch;(iii)(aa)the rendering of services by an employee to his employer in the course of his employment or the rendering of services by the holder of any office in performing the duties of his office, shall not be deemed to be the carrying on of an enterprise to the extent that any amount constituting remuneration as contemplated in the definition of "remuneration" in paragraph 1 of the Fourth Schedule to the Income Tax Act (disregarding paragraphs (i) and (vii) of that definition) is paid or is payable to such employee or office holder, as the case may be;(bb)subparagraph (aa) of this paragraph shall not apply in relation to any employment or office accepted by any person in carrying on any enterprise carried on by him independently of the employer or concern by whom the amount of remuneration is paid or payable;(iv)any activity carried on by a natural person essentially as a private or recreational pursuit or hobby or any activity carried on by a person other than a natural person which would, if it were carried on by a natural person, be carried on essentially as a private or recreational pursuit or hobby shall not be deemed to be the carrying on of an enterprise;(v)any activity shall to the extent to which it involves the making of exempt supplies not be deemed to be the carrying on of an enterprise;"entertainment" means the provision of any food, beverages, accommodation, entertainment, amusement, recreation or hospitality of any kind by a vendor whether directly or indirectly to anyone in connection with an enterprise carried on by him;"exempt supply" means a supply that is exempt from tax under section 12;"export country" means any country other than the Republic and any specified country;"exported", in relation to any movable goods supplied by any vendor under a sale or an instalment credit agreement, means—(a)consigned or delivered by the vendor to the recipient at an address in an export country as evidenced by documentary proof acceptable to the Commissioner; or(b)delivered by the vendor to the owner or charterer of any foreign-going ship contemplated in paragraph (a) of the definition of "foreign-going ship" or to a foreign-going aircraft when such ship or aircraft is going to a destination in an export country and such goods are for use or consumption in such ship or aircraft, as the case may be; or(c)delivered by the vendor to the owner or charterer of any foreign-going ship contemplated in paragraph (b) of the definition of "foreign-going ship" for use in such ship; or(d)removed from the Republic by the recipient for conveyance to an export country, if—(i)the recipient is ordinarily resident or carries on business in such country;(ii)the removal of such goods from the Republic is effected in a manner prescribed in terms of an export incentive scheme approved by the Minister;(iii)the vendor has been authorized by the Commissioner to participate in such scheme;(iv)the goods are of a kind to which such scheme applies; and(v)any conditions prescribed under such scheme have been complied with;"financial services" means the activities which are deemed by section 2 to be financial services;"fixed property" means land (together with improvements affixed thereto), any unit as defined in section 1 of the Sectional Titles Act, 1986 (Act No. 95 of 1986), any share in a share block company as defined in section 1 of the Share Blocks Control Act, 1980 (Act No. 59 of 1980), which confers a right to or an interest in the use of immovable property, and, in relation to a property time-sharing scheme, any time-sharing interest as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of 1983);"foreign-going aircraft" means any aircraft engaged in the transportation for reward of passengers or goods wholly or mainly on flights between airports in the Republic or a specified country and airports in export countries or between airports in export countries;"foreign-going ship" means—(a)any ship or other vessel engaged in the transportation for reward of passengers or goods wholly or mainly on voyages between ports in the Republic or a specified country and ports in export countries or between ports in export countries; or(b)any ship or other vessel registered in an export country where such ship or vessel is utilized for the purposes of a commercial, fishing or other concern conducted outside the Republic and any specified country by a person who is not a vendor and is not a resident of the Republic or any specified country;"goods" means corporeal movable things, fixed property and any real right in any such thing or fixed property, but excluding—(a)money;(b)any right under a mortgage bond or pledge of any such thing or fixed property; and(c)any stamp, form or card which has a money value and has been sold or issued by the State for the payment of any tax or duty levied under any Act of Parliament, except when subsequent to its original sale or issue it is disposed of or imported as a collector’s piece or investment article;"imported services" means a supply of services that is made by a supplier who is resident or carries on business outside the Republic to a recipient who is a resident of the Republic to the extent that such services are utilized or consumed in the Republic otherwise than for the purpose of making taxable supplies;"Income Tax Act" means the Income Tax Act, 1962 (Act No. 58 of 1962);"input tax", in relation to a vendor, means—(a)tax charged under section 7 and payable in terms of that section by—(i)a supplier on the supply of goods or services made by that supplier to the vendor; or(ii)the vendor on the importation of goods by him; or(iii)the vendor under the provisions of section 7(3);(b)an amount equal to the tax fraction (being the tax fraction applicable at the time of payment) of any amount paid in respect of any consideration in money given by the vendor for the supply (not being a taxable supply) to him by way of a sale on or after the commencement date by a resident of the Republic of any second-hand goods situated in the Republic: Provided that where, in relation to such supply, the parties are connected persons, such consideration in money shall be deemed to be the amount paid for the goods to the extent that it does not exceed the open market value of such goods; and(c)an amount equal to the tax fraction of the consideration in money deemed by section 10(16) to be for the supply (not being a taxable supply) by a debtor to the vendor of goods repossessed under an instalment credit agreement: Provided that the tax fraction applicable under this paragraph shall be the tax fraction applicable at the time of supply of the goods to the debtor under such agreement as contemplated in section 9(3)(c),where the goods or services concerned are acquired by the vendor wholly for the purpose of consumption, use or supply in the course of making taxable supplies or, where the goods or services are acquired by the vendor partly for such purpose, to the extent (as determined in accordance with the provisions of section 17) that the goods or services concerned are acquired by the vendor for such purpose;"instalment credit agreement" means any agreement entered into on or after the commencement date whereby any goods consisting of corporeal movable goods or of any machinery or plant, whether movable or immovable—(a)are supplied under a sale under which—(i)the goods are sold by the seller to the purchaser against payment by the purchaser to the seller of a stated or determinable sum of money at a stated or determinable future date or in whole or in part in instalments over a period in the future; and(ii)such sum of money includes finance charges stipulated in the agreement of sale; and(iii)the aggregate of the amounts payable by the purchaser to the seller under such agreement exceeds the cash value of the supply; and(iv)(aa)the purchaser does not become the owner of those goods merely by virtue of the delivery to or the use, possession or enjoyment by him thereof; or(bb)the seller is entitled to the return of those goods if the purchaser fails to comply with any term of that agreement; or(b)are supplied under a lease under which—(i)the rent consists of a stated or determinable sum of money payable at a stated or determinable future date or periodically in whole or in part in instalments over a period in the future; and(ii)such sum of money includes finance charges stipulated in the lease; and(iii)the aggregate of the amounts payable under such lease by the lessee to the lessor for the period of such lease (disregarding the right of any party thereto to terminate the lease before the end of such period) and any residual value of the leased goods on termination of the lease, as stipulated in the lease, exceeds the cash value of the supply; and(iv)the lessee is entitled to the possession, use or enjoyment of those goods for a period of at least 12 months; and(v)the lessee accepts the full risk of destruction or loss of, or other disadvantage to, those goods and assumes all obligations of whatever nature arising in connection with the insurance, maintenance and repair of those goods while the agreement remains in force;"insurance" means insurance or guarantee against loss, damage, injury or risk of any kind whatever, whether pursuant to any contract or law, and includes reinsurance; and "contract of insurance" includes a policy of insurance, an insurance cover, and a renewal of a contract of insurance: Provided that nothing in this definition shall apply to any insurance specified in section 2;"invoice" means a document notifying an obligation to make payment;"local authority" means—(a)any divisional council, rural council, municipal council, regional services council, town board, local board, village management board or health committee or any joint services board established under the KwaZulu and Natal Joint Services Act, 1990 (Act No. 84 of 1990);(b)any other body, council, board, committee or institution established or deemed to be established by or under any law which has functions similar to those of the councils, boards and committees enumerated in paragraph (a) and which may levy rates on the value of immovable property within its area of jurisdiction or receive payments for services rendered or to be rendered; and(c)any water board or regional water services corporation or any other institution which has powers similar to those of any such boards or corporations;"Minister" means the Minister of Finance;"money" means—(a)coins (other than coins made wholly or mainly from a precious metal other than silver) which the South African Reserve Bank has issued in the Republic in accordance with the provisions of section 14 of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), or which remain in circulation as contemplated in the proviso to subsection (1) of that section, and any paper currency which under the said Act is a legal tender;(b)(i)any coin (other than a coin made wholly or mainly from a precious metal) or paper currency of any country other than the Republic which is used or circulated or is intended for use or circulation as currency;(ii)any bill of exchange, promissory note, bank draft, postal order or money order,except when disposed of or imported as a collector's piece, investment article or item of numismatic interest;"motor car" includes any motor vehicle of a kind normally used on public roads, which has three or more wheels and is constructed or adapted wholly or mainly for the carriage of passengers, but does not include—(a)vehicles capable of accommodating only one person or suitable for carrying more than 16 persons; or(b)vehicles of an unladen mass of 3 500 kilograms or more; or(c)caravans and ambulances; or(d)vehicles constructed for a special purpose other than the carriage of persons and having no accommodation for carrying persons other than such as is incidental to that purpose;"open market value" in relation to the supply of goods or services, means the open market value thereof determined in accordance with the provisions of section 3;"output tax", in relation to any vendor, means the tax charged under section 7(1)(a) in respect of the supply of goods and services by that vendor;"person" includes any public authority, any local authority, any company, any body of persons (corporate or unincorporate), the estate of any deceased or insolvent person and any trust fund;"precious metals" means gold, silver, platinum, iridium and any other metals of the platinum group, and any other metal which the State President has by proclamation in the Gazette declared to be a precious metal for the purpose of this Act;"prescribed tax rate" means the rate of tax, expressed as a percentage, fixed by Parliament;"public authority" means any department or division of the public service (including a provincial administration, the South African Defence Force, the South African Police and the South African Prisons Service);"recipient", in relation to any supply of goods or services, means the person to whom the supply is made;"registration number", as respects any vendor, means the number allocated to him by the Commissioner for the purposes of this Act;"rental agreement" means—(a)any agreement entered into before, on or after the commencement date for the letting of goods, other than a lease referred to in paragraph (b) of the definition of "instalment credit agreement" in this section or a financial lease as defined in the Sales Tax Act, 1978 (Act No. 103 of 1978), prior to its repeal; and(b)any rental agreement, as defined in the said Act where such agreement is in force on or after the commencement date;"Republic", in the geographical sense, means the territory of the Republic of South Africa and includes the territorial waters, the fishing zone and the continental shelf referred to respectively in sections 2, 3 and 7 of the Territorial Waters Act, 1963 (Act No. 87 of 1963);"residential rental establishment" means any commercial rental establishment in which not less than 70 per cent of the persons to whom domestic goods and services are supplied reside, or are expected to reside, for a period of 45 days or longer;"resident of the Republic" means a person (other than a company) who is ordinarily resident in the Republic or a company which is a domestic company as defined in section 1 of the Income Tax Act: Provided that any other person or any other company shall be deemed to be a resident of the Republic to the extent that such person or company carries on in the Republic any enterprise or other activity and has a fixed or permanent place in the Republic relating to such enterprise or other activity;"returnable container" means any container belonging to a class of containers in relation to which, at the time of delivery of the contents thereof, ownership of that container is not transferred to the recipient of the contents and a specifically identified amount is usually charged as a deposit by the supplier of the contents upon the express undertaking of the supplier that upon the return of that container such deposit will be refunded or allowed as a credit to such recipient or any other person returning such container;"sale" means an agreement of purchase and sale and includes any transaction or act whereby or in consequence of which ownership of goods passes or is to pass from one person to another;"second-hand goods" means goods which were previously owned and used, excluding livestock;"services" means anything done or to be done, including the granting, assignment, cession or surrender of any right or the making available of any facility or advantage, but excluding a supply of goods or money;"specified country" means any country the territory of which formerly formed part of the Republic;"supplier", in relation to any supply of goods or services, means the person supplying the goods or services;"supply" includes all forms of supply, irrespective of where the supply is effected, and any derivative of "supply" shall be construed accordingly;"tax" means the tax leviable under section 7;"taxable supply" means any supply of goods or services which is chargeable with tax under the provisions of section 7(1)(a), including tax chargeable at the rate of zero per cent under section 11;"tax fraction" means the fraction calculated in accordance with the formula:

in which formula "r" is the rate of tax applicable under section 7(1);"tax invoice" means a document provided as required by section 20;"tax period", in relation to a vendor, means a tax period determined under section 27;"this Act" includes the regulations;"trust fund" means any fund consisting of cash or other assets the administration of which is entrusted to any person acting in a fiduciary capacity by any person, whether under a deed of trust or by agreement, or by a deceased person under a will made by that person;"unconditional gift" means a payment voluntarily made to any association not for gain for the carrying on or the carrying out of the purposes of that association and in respect of which no identifiable direct valuable benefit arises or may arise in the form of a supply of goods or services to the person making that payment or in the form of a supply of goods or services to any other person who is a connected person in relation to the person making the payment, but does not include any payment made by a public authority or a local authority; `"vendor" means any person who is or is required to be registered under this Act: Provided that where the Commissioner has under section 23 determined the date from which a person is a vendor that person shall be deemed to be a vendor from that date;"welfare organization" means any association not for gain which is registered as a welfare organization under the National Welfare Act, 1978 (Act No. 100 of 1978), if it carries on or intends to carry on activities consisting of the provision of food, meals, board, lodging, clothing or other necessaries, comforts or amenities to aged or indigent persons, children or physically or mentally handicapped persons.

2. Financial services

(1)For the purposes of this Act, the following activities shall be deemed to be financial services:

(a)The exchange of currency (whether effected by the exchange of bank notes or coin, by crediting or debiting accounts, or otherwise);

(b)the issue, payment, collection or transfer of ownership of a cheque or letter of credit;

(c)the issue, allotment, drawing, acceptance, endorsement or transfer of ownership of a debt security;

(d)the issue, allotment or transfer of ownership of an equity security or a participatory security;

(e)underwriting or subunderwriting the issue of an equity security, debt security or participatory security;

(f)the provision by any person of credit under an agreement (in this subsection referred to as a credit agreement) whereby money or money’s worth is provided by that person to another person who agrees to pay in the future a sum or sums exceeding in the aggregate the amount of such money or money’s worth;

(g)the renewal or variation of a debt security, equity security, participatory security or credit agreement;

(h)the provision, taking, variation or release of a guarantee, indemnity, security or bond in respect of the performance of obligations under a cheque, credit agreement, equity security, debt security or participatory security, or in respect of the activities specified in paragraphs (b) to (g);

(i)the provision, or transfer of ownership, of a life insurance policy or the provision of reinsurance in respect of any such policy;

(j)the provision, or transfer of ownership, of an interest in a superannuation scheme, or the management of a superannuation scheme;

(k)the provision or assignment of a futures contract through a futures exchange;

(l)the activities of any fund, established under a Provincial ordinance for the purpose of promoting horse racing in any province and controlled by the Administrator of such province;

(m)the payment or collection on someone else’s behalf of any amount of interest, principal, dividend or other amount whatever in respect of any debt security, equity security, participatory security, a credit agreement, any life insurance policy, superannuation scheme or futures contract;

(n)agreeing to do, or arranging, any of the activities specified in paragraphs (a) to (m): Provided that the service of providing advice directly in connection with any of the activities specified in paragraphs (a) to (m), for which a separate fee is charged, shall not be deemed to be a financial service.

(2)For the purposes of subsection (1)—

(i)"cheque" means a cheque as defined in section 1 of the Stamp Duties Act, 1968 (Act No. 77 of 1968), a postal order, a money order, a traveler’s cheque, or any order or authorization (whether in writing, by electronic means, or otherwise) to a financial institution to credit or debit any account;

(ii)"currency" means any banknote or other currency of any country, other than when used as a collector’s piece, investment article, item of numismatic interest, or otherwise than as a medium of exchange;

(iii)"debt security" means any interest in or right to be paid money that is, or is to be, owing by any person, but does not include a cheque;

(iv)"equity security" means any interest in or right to a share in the capital of a juristic person or the interest in a close corporation of a member thereof;

(v)"life insurance policy" means a life policy as defined in section 1 of the Insurance Act, 1943 (Act No. 27 of 1943);

(vi)"participatory security" means a unit as defined in section 1 of the Unit Trusts Control Act, 1981 (Act No. 54 of 1981), but does not include an equity security, a debt security, money or a cheque;

(vii)"superannuation scheme" means a scheme whereby provision is made for the payment of benefits by a benefit fund, pension fund, provident fund or retirement annuity fund as defined in section 1 of the Income Tax Act.

(3)Notwithstanding subsection (2), the terms "debt security", "equity security" and "participatory security" do not include any of the following:

(a)A life insurance policy or any other policy of insurance;

(b)any ownership or interest in land, other than an interest as mortgagee;

(c)a share in the share capital of a share block company as defined in section 1 of the Share Blocks Control Act, 1980 (Act No. 59 of 1980);

(d)any interest of a member of a close corporation which confers on the member a time-sharing interest as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of 1983), on the terms and conditions contained in the association agreement of such close corporation;

(e)an interest in a superannuation scheme.

(4)Notwithstanding anything in this section, "financial services" does not include the cession, assignment or other transfer of any right to receive payment in relation to any taxable supply where, as a result of any such cession, assignment or transfer, output tax in relation to that taxable supply would not be or become attributable to any tax period for the purposes of section 16(3).

3. Determination of "open market value"

(1)For the purposes of this section—

(a)"similar supply", in relation to a supply of goods or services, means any other supply of goods or services that, in respect of the characteristics, quality, quantity, functional components, materials and reputation of the first-mentioned goods or services, is the same as, or closely or substantially resembles, that supply of goods or services;

(b)the open market value of a supply shall include any tax charged under section 7(1)(a) on that supply.

(2)For the purposes of this Act, the open market value of any supply of goods or services at any date shall be the consideration in money which the supply of those goods or services would generally fetch if supplied in similar circumstances at that date in the Republic, being a supply freely offered and made between persons who are not connected persons.

(3)Where the open market value of any supply of goods or services cannot be determined under subsection (2), the open market value shall be the consideration in money which a similar supply would generally fetch if supplied in similar circumstances at that date in the Republic, being a supply freely offered and made between persons who are not connected persons.

(4)Where the open market value of any supply of goods or services cannot be determined in terms of subsection (2) or (3), the open market value shall be determined in accordance with a method approved by the Commissioner which provides a sufficiently objective approximation of the consideration in money which could be obtained for that supply of those goods or services.

(5)For the purposes of this Act the open market value of any consideration, not being consideration in money, for a supply of goods or services shall be ascertained in the same manner, with any necessary modifications, as the open market value of any supply of goods or services is ascertained under the provisions of this section.

Part I – Administration

4. Act to be administered by Commissioner

(1)The Commissioner shall be responsible for carrying out the provisions of this Act.

(2)A notice in the Gazette that any person has been appointed to hold office as Commissioner for Inland Revenue or to act in that capacity, shall be conclusive evidence of such appointment without further proof.

5. Exercise of powers and performance of duties

(1)The powers conferred and the duties imposed upon the Commissioner by or in terms of the provisions of this Act or any amendment thereof may be exercised or performed by the Commissioner personally, or by any officer engaged in carrying out the said provisions under the control, direction or supervision of the Commissioner.

(2)Any decision made and any notice or communication issued or signed by any such officer may be withdrawn or amended by the Commissioner or by the officer concerned, and shall for the purposes of the said provisions, until it has been so withdrawn, be deemed to have been made, issued or signed by the Commissioner.

6. Secrecy

(1)A person employed in carrying out the provisions of this Act shall not—

(a)disclose to any person or his representative any matter in respect of any other person that may in the exercise of his powers or the performance of his duties under the said provisions come to his knowledge; or

(b)permit any person to have access to any records in the possession or custody of the Commissioner,

except in the exercise of his powers or the performance of his duties in terms of this Act or by order of a competent court: Provided that the Auditor-General shall in the performance of his duties in terms of section 5 of the Auditor-General Act, 1989 (Act No. 52 of 1989), have access to all records and documents in the possession or custody of the Commissioner for the purposes of this Act.

(2)The provisions of subsection (1) shall not be construed as preventing the Commissioner from—

(a)using any information obtained by him in the exercise of his powers or the performance of his duties under this Act for the purposes of any other fiscal law administered by him;

(b)disclosing such information to the Commissioner for Customs and Excise if he is satisfied that it is required for the prevention or combating of the evasion of any tax, duty or levy imposed under any fiscal law administered by that Commissioner;

(c)disclosing to the Head: Central Statistical Services the names and addresses of vendors who, according to the Commissioner's records, carry on enterprises falling within categories designated by the said Head.

(3)No person shall in any manner publish or make known to any other person (not being an officer performing his duties under the control, direction or supervision of the Commissioner or the Commissioner for Customs and Excise or the Postmaster-General) the contents or tenor of any instruction or communication given or made by the Commissioner or the Commissioner for Customs and Excise or the Postmaster-General or any such officer in the performance of his or their duties in terms of this Act for or concerning the examination or investigation of the affairs of any person or class of persons or the fact that such instruction or communication has been given or made, or any information concerning the tax matters of a person or class of persons: Provided that the provisions of this subsection shall not be construed—

(a)as preventing any person or his representative who is or may be affected by any such examination, investigation or furnishing of information from publishing or making known information concerning his own tax matters; or

(b)subject to the provisions of subsections (1) and (4), as in any way limiting the duties or powers of the Commissioner or the Commissioner for Customs and Excise or the Postmaster-General or any such officer; or

(c)as preventing any person from publishing or making known anything which has been published or made known by that person or his representative as contemplated in paragraph (a) or by the Commissioner or the Commissioner for Customs and Excise or the Postmaster-General or any such officer in the exercise of his duties or powers.

(4)The Commissioner for Customs and Excise or any other person employed in carrying out the provisions of any fiscal law administered by the said Commissioner shall not disclose any information supplied to that Commissioner under subsection (2)(b) to any person or permit any person to have access thereto, except in the exercise of his powers or the performance of his duties under such a law or by order of a competent court.

(5)The Head: Central Statistical Services or any person acting under his direction and control shall not disclose any information supplied to that Head under subsection (2)(c) to any person or permit any person to have access thereto, except in the exercise of his powers or the performance of his duties to collect statistics or to publish statistics in any anonymous form.

(6)Any person who contravenes the provisions of subsection (1), (3), (4) or (5) shall be guilty of an offence and liable on conviction to a fine not exceeding R5 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment.

Part II – Value-added tax

7. Imposition of value-added tax

(1)Subject to the exemptions, exceptions, deductions and adjustments provided for in this Act, there shall be levied and paid for the benefit of the State Revenue Fund a tax, to be known as the value-added tax—

(a)on the supply by any vendor of goods or services supplied by him on or after the commencement date in the course or furtherance of any enterprise carried on by him;

(b)on the importation of any goods into the Republic by any person on or after the commencement date; and

(c)on the supply of any imported services by any person on or after the commencement date,

calculated at the prescribed tax rate on the value of the supply concerned or the importation, as the case may be.

(2)Except as otherwise provided in this Act, the tax payable in terms of paragraph (a) of subsection (1) shall be paid by the vendor referred to in that paragraph, the tax payable in terms of paragraph (b) of that subsection shall be paid by the person referred to in that paragraph and the tax payable in terms of paragraph (c) of that subsection shall be paid by the recipient of the imported services.

(3)

(a)Where any goods manufactured in the Republic, being of a class or kind subject to excise duty under Part 2 of Schedule No. 1 to the Customs and Excise Act, have been supplied at a price which does not include such excise duly and tax has become payable in respect of the supply in terms of subsection (1)(a), value-added tax shall be levied and paid at the prescribed tax rate for the benefit of the State Revenue Fund on an amount equal to the amount of such excise duty which would, subject to any rebate of such excise duty under the said Act, be payable.

(b)The tax payable in terms of paragraph (a) shall be paid by the person liable in terms of the Customs and Excise Act for the payment of the said excise duty.

(c)The Commissioner and the Commissioner for Customs and Excise shall make such arrangements as they deem necessary—

(i)for the collection (in such manner as they may determine) by the Commissioner for Customs and Excise on behalf of the Commissioner of the tax payable in terms of this subsection; and

(ii)for the exchange of such information as is necessary for the carrying out of such arrangements.

(d)Subject to this Act, the provisions of the Customs and Excise Act relating to the clearance of goods subject to excise duty and the payment of such excise duty shall mutatis mutandis have effect as if enacted in this Act.

8. Certain supplies of goods or services deemed to be made or not made

(1)For the purposes of this Act, where—

(a)goods acquired, manufactured, assembled, constructed or produced by a person are sold, under a power exercisable by another person, in or towards satisfaction of a debt owed by the person whose goods are sold; and

(b)the person whose goods are sold has not furnished, to the person exercising the power of sale, a statement in writing that the supply of those goods would not be a taxable supply if those goods were sold by the person whose goods are sold, and stating fully the reasons why that supply would not be a taxable supply,

those goods shall be deemed to be supplied in the course of an enterprise.

(2)For the purposes of this Act, where a person ceases to be a vendor, any goods (other than any goods in respect of the acquisition of which by the vendor a deduction of input tax under section 16(3) was denied in terms of section 17(2)) or right capable of assignment, cession or surrender which in either case then forms part of the assets of his enterprise, shall be deemed to be supplied by him in the course of his enterprise immediately before he ceased to be a vendor, unless the enterprise is carried on by another person who in terms of section 53 is deemed to be a vendor: Provided that where such right is so deemed to be supplied that supply shall be deemed to be a supply of a service.

(3)For the purposes of this Act, a credit agreement to which section 13 of the Credit Agreements Act, 1980 (Act No. 75 of 1980), applies shall be deemed not to be a supply of goods or services unless the credit receiver has failed to exercise the right under that section to terminate the agreement within the period available to him under that section.

(4)

(a)For the purposes of this Act, any lay-bye sale (as defined in Government Notice No. R1234 of 13 June 1980, as amended by Government Notice No. R1814 of 29 August 1980, issued in terms of section 9 of the Price Control Act, 1964 (Act No. 25 of 1964)) whereby goods are sold for a consideration not exceeding R10 000 and are reserved by deposit for delivery when the purchase price or a determined portion thereof is paid shall not be deemed to be a supply of goods or services unless and until the goods are delivered to the purchaser.

(b)Where such agreement is cancelled or terminates for any other reason and the seller retains any amount paid by the purchaser or recovers any amount owing by the purchaser under such agreement, the seller shall for the purposes of this Act be deemed to have supplied a service in respect of such agreement.

(5)For the purposes of this Act a vendor shall be deemed to supply services to any public authority or local authority to the extent of any payment made by the authority concerned to or on behalf of the vendor in respect of the taxable supply of goods or services by the vendor to any person.

(6)For the purposes of this Act a local authority shall be deemed to supply services to any person where any amount of rates or levies is payable by that person to such local authority.

(7)The disposal of an enterprise as a going concern, or a part thereof which is capable of separate operation, shall for the purposes of this Act be deemed to be a supply of goods made in the course or furtherance of such enterprise.

(8)For the purposes of this Act, except section 16(3), where a vendor receives any indemnity payment under a contract of insurance, that payment shall, to the extent that it relates to a loss incurred in the course of carrying on an enterprise, be deemed to be consideration received for a supply of services performed on the day of receipt of that payment by that vendor in the course or furtherance of his enterprise: Provided that this subsection shall not apply in respect of any indemnity payment received under a contract of insurance where the supply of services contemplated by that contract is not a supply subject to tax under section 7(1)(a).

(9)For the purposes of this Act, where any vendor in carrying on an enterprise in the Republic transfers goods or provides any service to his branch in respect of which the provisions of paragraph (ii) of the proviso to the definition of "enterprise" in section 1 are applicable, the vendor shall be deemed to supply such goods or service in the course or furtherance of his enterprise.

(10)For the purposes of this Act, where, any goods are repossessed under an instalment credit agreement, a supply of such goods shall be deemed to be made by the debtor under such instalment credit agreement to the person exercising his right of repossession, and where such debtor is a vendor the supply shall be deemed to be made in the course or furtherance of his enterprise unless such goods did not form part of the assets held or used by him for the purposes of his enterprise.

(11)For the purposes of this Act, a supply of the use or right to use or the grant of permission to use any goods (whether with or without a driver, pilot, crew or operator) under any rental agreement, instalment credit agreement, charter party, agreement for chartering or any other agreement under which such use or permission to use is granted, shall be deemed to be a supply of goods.

(12)For the purposes of this Act, the return of any returnable container in the circumstances as contemplated in the definition of "returnable container" in section 1 shall be deemed not to be a supply of goods or services.

(13)For the purposes of this Act, where any person bets an amount on the outcome of a race or on any other event or occurrence, the person with whom the bet is placed shall be deemed to supply a service to such first-mentioned person.

(14)For the purposes of this Act, where any goods are supplied by a vendor to a person, other than in the circumstances contemplated in paragraph 2(b) of the Seventh Schedule to the Income Tax Act, and a deduction under section 16(3) in respect of the acquisition by the vendor of such goods was denied in terms of section 17(2), the vendor shall be deemed to have supplied the goods otherwise than in the course or furtherance of his enterprise.

(15)For the purposes of this Act, where a single supply of goods or services or of goods and services would, if separate considerations had been payable, have been charged with tax in part at the rate applicable under section 7(1)(a) and in part at the rate applicable under section 11, each part of the supply concerned shall be deemed to be a separate supply.

9. Time of supply

(1)For the purposes of this Act a supply of goods or services shall, except as otherwise provided in this Act, be deemed to take place at the time an invoice is issued by the supplier or the recipient in respect of that supply or the time any payment of consideration is received by the supplier in respect of that supply, whichever time is earlier.

(2)A supply of goods or services shall be deemed to take place—

(a)where the supplier and the recipient are connected persons—

(i)in the case of a supply of goods which are to be removed, at the time of the removal; and

(ii)in the case of a supply of goods which are not to be removed, at the time when they are made available to the recipient; and

(iii)in the case of a supply of services, at the time the services are performed:

Provided that this paragraph shall not apply in any case where an invoice is issued in respect of that supply or any payment is made in respect of that supply on or before—

(aa)the day on which the return is furnished for the tax period during which that supply would, but for this proviso, have been made; or

(bb)the last day prescribed by this Act for furnishing the return for the tax period during which that supply would, but for this proviso, have been made;

(b)where that supply is a supply to which section 8(3) refers, on the day after the last day of the period during which the recipient may exercise the right under section 13 of the Credit Agreements Act, 1980 (Act No. 75 of 1980), to terminate the agreement;

(c)where that supply is a supply to which section 8(4) refers, at the time at which the goods are delivered to the recipient: Provided that in any case in which a supply of services is deemed to take place under section 8(4)(b), that supply of services shall be deemed to take place at the time that the agreement of sale is cancelled or terminates;

(d)where the supply is for a consideration in money received by the supplier by means of any machine, meter or other device operated by a coin or token—

(i)in the case of such supplier, at the time any such coin or token is taken from that machine, meter or other device by or on behalf of the supplier; and

(ii)in the case of the recipient of such supply at the time the coin or token is inserted into that machine, meter or other device by or on behalf of the recipient;

(e)where the provisions of section 8(9) are applicable in respect of a transfer of goods or the provision of any service by a vendor to his branch at the time the goods are removed and delivered to such branch or the service is rendered, as the case may be.

(3)Notwithstanding anything in subsection (1) or (2) of this section—

(a)where goods are supplied under any rental agreement or where services are supplied under any agreement or law which provides for periodic payments, they shall be deemed to be successively supplied for successive parts of the period of the agreement or as determined by such law, and each of the successive supplies shall be deemed to take place when a payment becomes due or is received, whichever is the earlier;

(b)where and to the extent that—

(i)goods are supplied progressively or periodically under any agreement or law which provides for the consideration for that supply to be paid in instalments or periodically and in relation to the progressive or periodic supply of those goods; or

(ii)goods or services supplied directly in the construction, repair, improvement, erection, manufacture, assembly or alteration of goods are supplied under any agreement or law which provides for the consideration for that supply to become due and payable in instalments or periodically in relation to the progressive nature of the work,

those goods or services shall be deemed to be successively supplied, and each such successive supply shall be deemed to take place whenever any payment in respect of any supply becomes due, is received, or any invoice relating only to that payment is issued, whichever is the earliest;

(c)where goods are supplied under an instalment credit agreement, that supply shall be deemed to take place at the time the goods are delivered or the time any payment of consideration is received by the supplier in respect of that supply, whichever time is earlier;

(d)where goods consisting of fixed property or any real right therein are supplied under a sale, that supply shall be deemed to take place—

(i)on the date occurring at the end of the period of six months reckoned from the date on which such sale is entered into: Provided that where the recipient acquires such goods by the exercise of an option to purchase or a right of pre-emption, the date on which the sale is entered into shall be deemed to be the date on which the option or right of pre-emption was exercised; or

(ii)where registration of transfer of the goods is effected in a deeds registry, on the date of such registration; or

(iii)on the date on which any payment is made in respect of the consideration for such supply,

whichever date is earliest;

(e)where any supply of a service is deemed to be made as contemplated in section 8(13), the service shall be deemed to be supplied to the extent that payment of any amount of the bet is made, and each such supply shall be deemed to take place whenever any payment in respect of such supply is received by the supplier.

(4)Subject to the provisions of subsections (2)(a) and (6), where goods are supplied under an agreement, other than an instalment credit agreement or rental agreement, and the goods or part of them are appropriated under that agreement by the recipient in circumstances where the whole of the consideration is not determined at the time they are appropriated, that supply shall be deemed to take place when and to the extent that any payment in terms of the agreement is due or is received or an invoice relating to the supply is issued by the supplier or the recipient, whichever is the earliest.

(5)Where any goods or any right capable of assignment, cession or surrender is deemed to be supplied by a vendor in the course of his enterprise as contemplated in section 8(2) the time of supply shall be deemed to be the time contemplated in that section.

(6)Where any supply of goods or services is deemed to be made as contemplated in section 18(1) the time of supply shall be deemed to be the time that the goods or services are applied as contemplated in the said subsection.

(7)The supply of goods or services which is deemed to be made by any vendor as contemplated in section 18(3) shall be deemed to take place at the end of the month in respect of which the cash equivalent of the benefit or advantage concerned, as determined under the Seventh Schedule to the Income Tax Act, or a portion of such cash equivalent, is in terms of the Fourth Schedule to that Act required to be included in the remuneration of the employee or office holder to whom the benefit or advantage is granted or, where such cash equivalent is not required to be included in the remuneration of the employee or office holder in terms of the said Fourth Schedule, on the last day of the year of assessment in terms of the said Act, as applicable to that employee or office holder, during which the benefit or advantage was granted to him.

(8)Where a supply of repossessed goods is deemed by section 8(10) to be made by a debtor under an instalment credit agreement, the time of that supply shall be deemed to be the day on which the goods are repossessed or, where the debtor may under any law be reinstated in his rights and obligations under such agreement, the day after the last day of any period during which the debtor may under such law be so reinstated.

10. Value of supply of goods or services

(1)For the purposes of this Act the following provisions of this section shall apply for determining the value of any supply of goods or services.

(2)The value to be placed on any supply of goods or services shall, save as is otherwise provided in this section, be the value of the consideration for such supply, as determined in accordance with the provisions of subsection (3), less so much of such value as represents tax: Provided that—

(i)there shall be excluded from such consideration the value of any postage stamp as defined in section 1 of the Post Office Act, 1958 (Act No. 44 of 1958), when used in the payment of consideration for any service supplied by the Department of Posts and Telecommunications;

(ii)where the portion of the value of the said consideration which represents tax is not accounted for separately by the vendor, the said portion shall be deemed to be an amount equal to the tax fraction of that consideration.

(3)For the purposes of this Act the value of any consideration referred to in this section shall be—

(a)to the extent that such consideration is a consideration in money, the amount of the money; and

(b)to the extent that such consideration is not a consideration in money, the open market value of that consideration.

(4)Where—

(a)a supply is made by a vendor for no consideration or for a consideration in money which is less than the open market value of the supply;

(b)the supplier and recipient are connected persons in relation to each other; and

(c)the recipient is not entitled under section 16(3) to make a deduction in respect of that supply,

the consideration in money for the supply shall be deemed to be the open market value of the supply: Provided that this subsection shall not apply to the supply of a benefit or advantage of employment contemplated in section 18(3).

(5)Where goods or services are deemed to be supplied by a vendor in terms of section 8(2) or (9), the supply shall be deemed to be made for a consideration in money equal to the lesser of—

(a)the cost to the vendor of the acquisition, manufacture, assembly, construction or production of such goods or services, including—

(i)any tax charged in respect of the supply to the vendor of such goods or services or of any components, materials or services utilized by him in such manufacture, assembly, construction or production;

(ii)where such goods or any right referred to in section 8(2), when held by the vendor, constituted trading stock as defined in section 1 of the Income Tax Act, any further costs (including tax) incurred by him in respect of such goods or right as contemplated in section 22(3)(a) of that Act; and

(iii)any costs (including tax) incurred by the vendor in respect of the transportation or delivery of such goods or the provision of such services in connection with the transfer of such goods or the provision of such services as contemplated in section 8(9); or

(b)the open market value of such supply.

(6)For the purposes of this Act, where goods are supplied under an instalment credit agreement, the consideration in money for the supply shall be deemed to be the cash value of that supply.

(7)Where goods or services are deemed by section 18(1) to be supplied by a vendor, the supply shall, subject to the provisions of subsection (8), be deemed to be made for a consideration in money equal to the open market value of such supply.

(8)Where any repairs, maintenance, insurance or licence in respect of a motor vehicle is deemed to be supplied by a vendor by section 18(1), such supply shall be deemed to be made for a consideration in money equal to the cost (including tax) to such vendor of acquiring such repairs, maintenance, insurance or licence: Provided that where such vendor does not maintain accurate data for the purposes of calculating such consideration in money, such supply shall be deemed to be made for a consideration in money equal to the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor vehicle concerned.

(9)Where goods or services are deemed by section 18(2) to be supplied by a vendor, the supply shall be deemed to be made for a consideration in money determined in accordance with the formula

in which formula—

"A"represents the lesser of—

(i)

(aa)the cost of those goods or services, including any tax charged in respect of those goods or services; or

(bb)where the vendor was at some time after the acquisition of such goods or services deemed by section 18(4) to have been supplied with such goods or services, the amount which was represented by "B" in the formula contemplated in section 18(4) when such goods or services were deemed to be supplied to the vendor; or

(cc)where the vendor was at some time after the acquisition of the goods or services required to make an adjustment contemplated in section 18(2) or (5), the amounts then represented by "A" in the said formula or by "B" in the formula contemplated in section 18(5) respectively, in the most recent adjustment made under section 18(2) or (5) by the vendor prior to such deemed supply of goods or services; and

(ii)the open market value of the supply of those goods or services at the time any reduction in the extent of the consumption or use of the goods is deemed by section 18(6) to take place;

"B"represents the percentage that the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of such goods or services determined under section 17(1), section 18(4) or (5) or this subsection, whichever was applicable in the period immediately preceding the 12 month period contemplated in "C"; and

"C"represents the percentage that, during the 12 month period during which the increase in use or application of the goods or services is deemed to take place, the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of the goods: Provided that where the percentage contemplated in "B" does not exceed the said percentage by more than 10 per cent, the said percentage shall be deemed to be the percentage determined in "B".

(10)For the purposes of this Act—

(a)where domestic goods and services are supplied by a commercial rental establishment for a period exceeding 45 days the value of the portion of the supply as relates to that part of the period of the supply as exceeds 45 days shall (unless the provisions of paragraph (b) are applicable) be deemed to be 60 per cent of the value of the supply for the said part, as determined before applying this paragraph;

(b)where domestic goods and services are, by agreement between the supplier and the recipient, supplied by a residential rental establishment for a period of 45 days or longer or for successive periods which will in the aggregate exceed 45 days, the value of the supply of such goods and services shall, as from the commencement of the supply, be deemed to be 60 per cent of the value of the supply, as determined before applying this paragraph;

(c)where goods and services are supplied by a commercial rental establishment at an inclusive charge for domestic goods and services and also for meals or other services, such inclusive charge shall be apportioned between—

(i)such domestic goods and services; and

(ii)such meals and other services,

and the respective values of the supply of such domestic goods and services and the supply of such meals or other services shall be determined accordingly: Provided that the amount apportioned to such meals or other services shall, unless the Commissioner, having regard to the circumstances of the case, otherwise directs, not be less than 20 per cent of such inclusive charge.

(11)Where a service is under section 8(4)(b) deemed to be supplied, the consideration in money for the supply shall be deemed to be an amount equal to the amount retained or recovered as contemplated in that section.

(12)Where any supply of goods is a supply which would, but for the proviso to section 11(1), be charged with tax at the rate of zero per cent, the consideration in money for that supply shall be deemed to be an amount equal to the purchase price of those goods to the supplier: Provided that in any case where the deduction of input tax referred to in that proviso has been made by any other person (where that supplier and that other person are connected persons), the consideration in money for that supply shall be deemed to be an amount equal to the greater of the purchase price of those goods to that supplier and the purchase price of those goods to that other person: Provided further that for the purposes of this subsection, the purchase price of any goods shall not be reduced by any amount of input tax deducted under section 16(3) by the supplier or, as the case may be, any other person where the supplier and that other person are connected persons.

(13)Where goods or services are deemed to be supplied by a vendor under section 18(3), the consideration in money for the supply shall be deemed to be an amount equal to the cash equivalent of the benefit or advantage granted to the employee or office holder, as contemplated in section 9(7): Provided that where—

(i)such benefit or advantage consists of the right to use a motor car as contemplated in paragraph 2(b) of the Seventh Schedule to the Income Tax Act; and

(ii)the vendor was in terms of section 17(2) not entitled to deduct the full amount of input tax in terms of section 16(3) in respect of the acquisition of such motor car,

the consideration in money for the supply shall be deemed to be the amount determined in the manner prescribed by the Minister in the Gazette for the category of motor car used.

(14)Where services are or are deemed by section 8(5) to be supplied to any public authority or local authority by any vendor the consideration in money for such supply shall be deemed to be the amount of any payment made from time to time by the authority concerned to or on behalf of the vendor as contemplated in the said section.

(15)Where services are deemed by section 8(6) to be supplied to any person by any local authority the consideration in money for such supply shall be deemed to be the amount of any payment made from time to time by such person in respect of rates or levies.

(16)Where by reason of the repossession of goods from a debtor under an instalment credit agreement a supply of such goods is deemed by section 8(10) to be made by that debtor, the consideration in money for that supply shall be deemed to be an amount equal to the balance of the cash value of the goods (being the cash value thereof applied under subsection (6) in respect of the supply of the goods to the debtor under the said agreement) which has not been recovered on the date on which the supply of the goods by the debtor is deemed by section 9(8) to be made: Provided that the said balance shall be deemed to be the amount remaining after deducting from the cash value so much of the sum of the payments made by the debtor under the said agreement as, on the basis of an apportionment in accordance with the rights and obligations of the parties to the said instalment credit agreement, may properly be regarded as having been made in respect of the cash value.

(17)Where a service is deemed by section 8(13) to be supplied to any person, the consideration in money for such supply shall be deemed to be the amount that is received in respect of the bet.

(18)Where a right to receive goods or services to the extent of a monetary value stated on any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Post Office Act, 1958, and any token, voucher or stamp contemplated in subsection (19)) is granted for a consideration in money, the supply of such token, voucher or stamp shall be disregarded for the purposes of this Act, except to the extent (if any) that such consideration exceeds such monetary value.

(19)Where any token, voucher or stamp (other than a postage stamp as defined in section 1 of the Post Office Act, 1958) is issued for a consideration in money and the holder thereof is entitled on the surrender thereof to receive goods or services specified on such token, voucher or stamp or which by usage or arrangement entitles the holder to specified goods or services, without any further charge, the value of the supply of the goods or services made upon the surrender of such token, voucher or stamp shall be deemed to be nil.

(20)Where any token, voucher or stamp is issued by any vendor for no consideration and the holder thereof is entitled on surrender thereof to a supplier of goods or services to a discount on the price of goods or services supplied to the holder, the value of the supply of such goods or services shall be deemed to exclude the monetary value stated on such token, voucher or stamp.

(21)Where any supply of entertainment is made by a vendor and in terms of section 17 no deduction of input tax was made in terms of section 16(3) in respect of the acquisition by the vendor of goods or services for the purpose of such entertainment, the value of such supply shall be deemed to be nil.

(22)Where a taxable supply is not the only matter to which a consideration relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.

(23)Save as otherwise provided in this section, where any supply is made for no consideration the value of that supply shall be deemed to be nil.

11. Zero rating

(1)Where, but for the provisions of this section, a supply of goods would be charged With tax under section 7(1)(a), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where—

(a)the supplier has supplied the goods (being movable goods) in terms of a sale or instalment credit agreement and has exported the goods as contemplated in paragraph (a), (b) or (c) of the definition of "exported" in section 1; or

(b)the goods have been supplied in the course of repairing, renovating, modifying, or treating any goods to which subsection (2)(f)(ii) refers and the goods supplied—

(i)are wrought into, affixed to, attached to or otherwise form part of those other goods; or

(ii)being consumable goods, become unusable or worthless as a direct result of being used in that repair, renovation, modification or treatment process; or

(c)the goods are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if the goods are used exclusively in an export country; or

(d)the goods are supplied to a lessee or other person under a rental agreement, charter party or agreement for chartering, if such goods are used by such lessee or other person exclusively in any commercial, financial, industrial, mining, farming, fishing or professional concern conducted in an export country and payment of rent or other consideration under such agreement is effected from such export country; or

(e)the supply is to a registered vendor of an enterprise as a going concern or of a part of an enterprise where that part is capable of separate operation; or

(f)the supply is to the South African Reserve Bank, the South African Mint Company (Proprietary) Limited or any deposit-taking institution registered under the Deposit-taking Institutions Act, 1990 (Act No. 94 of 1990), of gold in the form of bars, ingots, buttons, wire, plate or granules or in solution, which has not undergone any manufacturing process other than the refining thereof or the manufacture or production of such bars, ingots, buttons, wire, plate, granules or solution; or

(g)the supply is of such goods used or consumed for agricultural, pastoral or other farming purposes as are set forth in Schedule 2, provided such supply is made in compliance with such conditions as may be prescribed in that Schedule; or

(h)the goods consist of petrol or a distillate fuel oil which is subject to the fuel levy chargeable in terms of Part 5 of Schedule No. 1 to the Customs and Excise Act; or

(i)the goods are supplied, as contemplated in section 8(9), by a vendor to his branch situated in an export country in respect of which the provisions of paragraph (ii) of the proviso to the definition of "enterprise" in section 1 are applicable:

Provided that paragraphs (a), (b),(c), (d) and (i) of this subsection shall not apply in respect of any supply of goods by a vendor if in respect of such goods input tax contemplated in paragraph (b) of the definition of "input tax" in section 1 has been deducted in terms of section 16(3) by that vendor or any other person where that vendor and that other person are connected persons.

(2)Where, but for this section, a supply of services would be charged with tax under section 7(1)(a), such supply of services shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where—

(a)the services (not being ancillary transport services) comprise the transport of passengers or goods—

(i)from a place outside the Republic and specified countries to another place outside the Republic and such countries; or

(ii)from a place in the Republic or a specified country to a place in an export country; or

(iii)from a place in an export country to a place in the Republic or a specified country; or

(b)the services comprise the transport of passengers from a place in the Republic or a specified country to another place in the Republic or a specified country to the extent that that transport is by aircraft and constitutes "international carriage" as defined in Article 1 of the Convention set out in the Schedule to the Carriage by Air Act, 1946 (Act No. 17 of 1946); or

(c)the services (including any ancillary transport services) comprise the transport of goods from a place in the Republic or a specified country to another place in the Republic or a specified country to the extent that those services are supplied by the same supplier as part of the supply of services to which paragraph (a) applies; or

(d)the services comprise the insuring or the arranging of the insurance or the arranging of the transport of passengers or goods to which any provision of paragraph (a), (b) or (c) applies; or

(e)the services comprise the transport of goods or any ancillary transport services supplied directly in connection with the exportation from or the importation into the Republic or a specified country of goods or the movement of goods through the Republic or any specified country from one export country to another export country, where such services are supplied directly to a person who is not a resident of the Republic, is not resident nor carrying on business in a specified country and is not a vendor, otherwise than through an agent or other person; or

(f)the services are supplied directly in connection with land, or any improvement thereto, situated in any export country; or

(g)the services are supplied directly in respect of—

(i)movable property situated in any export country at the time the services are rendered; or

(ii)goods temporarily admitted into the Republic from an export country which are exempt from tax on importation under Item 470.01, 470.02 or 480.00 of Schedule 1; or

(iii)goods in respect of which the provisions of paragraph (b) or (c) of the definition of "exported" in section 1 apply; or

(iv)the repair, maintenance, cleaning or reconditioning of a foreign-going ship or foreign-going aircraft; or

(h)the services comprise—

(i)the handling, pilotage, salvage or to wage of any foreign-going ship or foreign-going aircraft while situated in the Republic or a specified country; or

(ii)services provided in connection with the operation or management of any foreign-going ship or foreign-going aircraft,

where the services are supplied directly to a person who is not a resident of the Republic, is not resident nor carrying on business in a specified country and is not a vendor, otherwise than through an agent or other person; or

(i)the services of arranging—

(i)the supply of goods as contemplated in paragraph (b) or (c) of the definition of "exported"; or

(ii)the supply of services referred to in paragraph (g)(iv) or (h); or

(iii)the transport of goods (including ancillary transport services) within the Republic and the specified countries,

for a person who is not a resident of the Republic, is not resident nor carrying on business in a specified country and is not a vendor; or

(j)the services comprise the repair, maintenance, cleaning or reconditioning of a railway train operated by a person who is not a resident of the Republic, is not resident nor carrying on business in a specified country and is not a vendor; or

(k)the services are physically rendered elsewhere than in the Republic or a specified country; or

(l)the services are supplied for and to a person who is not a resident of the Republic or a specified country and who is outside the Republic and the specified countries at the time the services are rendered, not being services which are supplied directly in connection with—

(i)land or any improvement thereto situated inside the Republic or a specified country; or

(ii)movable property situated inside the Republic or a specified country at the time the services are rendered,

and not being services which are the acceptance by any person of an obligation to refrain from carrying on any enterprise, to the extent that the carrying on of that enterprise would have occurred within the Republic or a specified country; or

(m)the services comprise—

(i)the filing, prosecution, granting, maintenance, transfer, assignment, licensing or enforcement of intellectual property rights, including patents, designs, trademarks, copyrights, know-how, confidential information, trade secrets or similar rights; or

(ii)the acceptance by any person of an obligation to refrain from pursuing or exercising in whole or in part any such rights,

where and to the extent that those rights are for use outside the Republic and a specified country; or

(n)the services comprise the carrying on by a welfare organization of the activities referred to in the definition of "welfare organization" in section 1 and those services are in terms of section 8(5) deemed to be supplied by that organization to a public authority or local authority; or

(o)the services are supplied, as contemplated in section 8(9), by a vendor to his branch situated in an export country in respect of which the provisions of paragraph (ii) of the proviso to the definition of "enterprise" in section 1 are applicable.

(3)Where a rate of zero per cent has been applied by any vendor under a provision of this section, the vendor shall obtain and retain such documentary proof substantiating the vendor’s entitlement to apply the said rate under that provision as is acceptable to the Commissioner.

12. Exempt supplies

The supply of any of the following goods or services shall be exempt from the tax imposed under section 7(1)(a):

(a)The supply of any financial services, not being a supply of financial services which, but for this paragraph, would be charged with tax at the rate of zero per cent under section 11(2):

(b)the supply by any association not for gain of any donated goods or services or any other goods made or manufactured by such association if at least 80 per cent of the value of the materials used in making or manufacturing such other goods consists of donated goods;

(c)the supply of any accommodation in a dwelling—

(i)under an agreement for the letting and hiring of the accommodation; or

(ii)where the supplier is the employer of the recipient (including any employer as defined in paragraph 1 of the Fourth Schedule to the Income Tax Act), the recipient is entitled to occupy the accommodation as a benefit of his office or employment and his right thereto is limited to the period of his employment or the term of his office or a period agreed upon by the supplier and the recipient;

(d)the supply of leasehold land by way of letting (not being a grant or sale of the lease of that land) to the extent that that land is used or is to be used for the principal purpose of accommodation in a dwelling erected or to be erected on that land;

(e)the supply of land (together with any improvements to such land existing on the date on which the supplier became contractually obliged to supply such land and such existing improvements to the recipient) where such land is situated outside the Republic and such supply is made by way of sale or by way of letting;

(f)the supply of any services to any of its members in the course of the management of—

(i)a body corporate as defined in section 1 of the Sectional Titles Act, 1986 (Act No. 95 of 1986); or

(ii)a share block company as defined in section 1 of the Share Blocks Control Act, 1980 (Act No. 59 of 1980); or

(iii)any housing development scheme as defined in the Housing Development Schemes for Aged Persons Act, 1988 (Act No. 65 of 1988),

where the cost of supplying such services is met out of contributions levied by such body corporate or share block company or under such housing development scheme, as the case may be: Provided that this paragraph shall not apply where such body corporate or share block company applies in writing to the Commissioner, and the Commissioner, having regard to the circumstances of the case, directs that the provisions of this paragraph shall not apply to that body corporate or share block company: Provided further that this paragraph shall not apply to the services supplied by anybody corporate or share block company which manages a properly time-sharing scheme as defined in section 1 of the Property Time-sharing Control Act, 1983 (Act No. 75 of 1983);

(g)the supply of any service comprising the transport by any person in a vehicle operated by him of passengers and their personal effects by road or railway, not being a supply of any such service which, but for this paragraph, would be charged with tax at the rate of zero per cent under section 11(2)(a);

(h)

(i)the supply by the State (including any provincial administration) or any institution of a public character of any educational services—

(aa)in respect of primary or secondary education many school or pre-primary school education provided in any institution which meets the requirements of any recognized educational authority; or

(bb)in any technikon established or deemed to have been established or declared to be such under the Advanced Technical Education Act, 1967 (Act No. 40 of 1967), or any other Act of Parliament; or

(cc)in any educational institution established by or under any other law of the Republic which is in all material respects similar to a technikon referred to in subparagraph (bb); or

(dd)in any university established by an Act of Parliament or in any university college established under the Extension of University Education Act, 1959 (Act No. 45 of 1959); or

(ee)in any permanent institution in the Republic approved by the Minister for the purposes of section 18A of the Income Tax Act which has been formed—

(A)for the promotion of adult education, vocational training or technical education; or

(B)to promote the education and training of religious or social workers; or

(C)for the education or training of physically or mentally handicapped persons;

(ii)the supply by the State (including a provincial administration) or any institution of a public character solely or mainly for the benefit of pupils or students of such school, technikon, university or institution of any goods or services necessary for and subordinate and incidental to the supply of any services contemplated in subparagraph (i) of this paragraph (including the supply of board or lodging) where such goods or services are not supplied for a consideration other than the payment of school fees or tuition fees or fees for board or lodging.

13. Collection of tax on importation of goods, determination of value thereof and exemptions from tax

(1)For the purposes of this Act goods shall be deemed to be imported into the Republic on the date on which the goods are imported: Provided that goods which are entered for home consumption in terms of the Customs and Excise Act, shall be deemed to have been imported on the date on which they are so entered: Provided further that where any goods have been imported and entered in a licensed Customs and Excise warehouse but have not been entered for home consumption, any supply of such goods before they are entered for home consumption shall be disregarded for the purposes of this Act: Provided further that goods imported from Botswana, Lesotho, Swaziland and Namibia shall be declared and tax paid to an officer designated by the Commissioner for Customs and Excise on entry into the Republic in accordance with such procedures and at such place as the said Commissioner may prescribe by rule.

(2)For the purposes of this Act the value to be placed on the importation of goods into the Republic shall be deemed to be—

(a)where such goods are entered or are required to be entered for home consumption in terms of the Customs and Excise Act, the value thereof for customs duty purposes, plus any duty levied in terms of the said Act in respect of the importation of such goods, plus 10 per cent of the said value; or

(b)where such goods are not required to be so entered, the amount of the value which would have been used for customs duty purposes had they been subject to customs duty.

(3)The importation of the goods set forth in Schedule 1 to this Act shall be exempt from the tax imposed in terms of section 7(1)(b): Provided that for the purposes of Part A of that Schedule—

(i)the exemption in respect of the importation into the Republic of such goods as fall under the Items 409.01, 409.02 and 409.06 set out in the said Part shall not apply if at the time of export of such goods—

(aa)the supply of those goods was charged with tax at the rate of zero per cent in terms of section 11; or

(bb)the supply of those goods was made before the commencement date and that supply would have been charged with tax at the rate of zero per cent in terms of section 11, if the supply had taken place on or after the commencement date;

(ii)the exemption in respect of the importation of goods contemplated in Item 409.07 of the said Part shall apply only if such goods are not sold by the person sending or removing the goods from the Republic;

(iii)the exemption in respect of the importation of goods contemplated in Items 409.04 and 409.07 of the said Part shall apply only to the extent of the value of the goods sent from the Republic on the day they left the Republic.

(4)Where tax is payable in respect of the importation of goods into the Republic and such goods are not entered and will not require to be entered for home consumption in terms of the Customs and Excise Act and tax has not been paid to the Commissioner for Customs and Excise when the goods were imported the importer shall within 30 days after the importation of the goods—

(a)furnish the Commissioner with a declaration (in such form as the Commissioner may prescribe) containing such information as may be required; and

(b)calculate the tax payable on the relevant value at the rate of tax in force on the date of importation of the goods and pay such tax to the Commissioner:

Provided that this subsection shall not apply in respect of the importation by a vendor in the circumstances contemplated in this subsection, if the tax payable would be allowable as a deduction in terms of section 16(3)(a)(iii) or section 16(3)(b)(ii).

(5)Except as contemplated in subsection (4), the Commissioner, the Commissioner for Customs and Excise and the Postmaster-General may make such arrangements as they may deem necessary—

(a)for the collection (in such manner as they may determine) by the Commissioner for Customs and Excise and the Postmaster-General on behalf of the Commissioner of the value-added tax payable in terms of this Act in respect of the importation of any goods into the Republic; and

(b)for the exchange of such information as is necessary for the carrying out of such arrangements.

(6)Subject to the provisions of this Act, the provisions of the Customs and Excise Act relating to the importation, transit, coastwise carriage, clearance and payment of goods shall mutatis mutandis apply as if enacted in this Act, whether or not the said provisions apply for the purposes of any duty levied in terms of the Customs and Excise Act.

14. Collection of value-added tax on imported services, determination of value thereof and exemptions from tax

(1)Where tax is payable in terms of section 7(1)(c) in respect of the supply of imported services the recipient shall within 30 days of the date referred to in subsection (2)—

(a)furnish the Commissioner with a declaration (in such form as the Commissioner may prescribe) containing such information as may be required; and

(b)calculate the tax payable on the value of the imported services at the rate of tax in force on the date of supply of the imported services and pay such tax to the Commissioner.

(2)For the purposes of this Act, a supply of imported services shall be deemed to take place at the time an invoice is issued by the supplier or recipient in respect of that supply or the time any payment is made by the recipient in respect of that supply, whichever time is the earlier.

(3)For the purposes of this Act, the value to be placed on the supply of imported services shall, save as otherwise provided in this section, be the value of the consideration for the supply, as determined in terms of section 10(3) or the open market value of the supply, whichever is the greater.

(4)Where a person carries on activities outside the Republic which do not form part of the activities of any enterprise carried on by him and in the course of such first-mentioned activities services are rendered for the purposes of such enterprise which, if rendered by anybody other than the said person, would be imported services, such services shall for the purposes of section 7(1)(c) be deemed to be imported services supplied and received by that person in respect of such enterprise.

(5)The tax chargeable in terms of section 7(1)(c) shall not be payable in respect of—

(a)a supply which is chargeable with tax in terms of section 7(1)(a) at the rate provided in section 7; or

(b)a supply which, if made in the Republic, would be charged with tax at the rate of zero per cent applicable in terms of section 11 or would be exempt from tax in terms of section 12.

15. Accounting basis

(1)Except as hereinafter provided, every vendor shall account for tax payable on an invoice basis for the purposes of section 16.

(2)Subject to the provisions of subsection (3), the Commissioner may, on application in writing by a vendor, direct that the vendor account for the tax payable on a payments basis for the purposes of section 16 with effect from the vendor’s registration in terms of this Act or, where he has accounted for tax payable on an invoice basis prior to making an application under this subsection, from the commencement of the tax period immediately following the tax period during which that direction is made by the Commissioner, if—

(a)the vendor is a public authority, local authority or association not for gain; or

(b)

(i)the total value of the vendor’s taxable supplies in the period of 12 months ending at the end of any tax period has not exceeded R1 million; or

(ii)the total value of the vendor’s taxable supplies in the period of 12 months beginning on the first day of any month is not likely to exceed the amount specified in subparagraph (i):

Provided that the provisions of this Act relating to the de termination of the value of any supply of goods or services, whether such supply is made before or on or after the commencement date, shall apply for the purposes of this subsection, but no regard shall he had to any tax charged in respect of such supply.

(3)Where the Commissioner has under subsection (2) directed that a vendor account for tax payable on a payments basis, and—

(a)the vendor has ceased to satisfy the conditions of subsection (2) under which any such direction may be given, and—

(i)the vendor notifies the Commissioner thereof as required by section 25(c); or

(ii)the Commissioner is otherwise satisfied thereof; or

(b)the vendor has made an application in writing to the Commissioner to account for tax payable on an invoice basis,

the Commissioner shall direct that the vendor account for the tax payable on an invoice basis with effect from the commencement of a future tax period approved by the Commissioner (hereinafter referred to as the changeover period): Provided that for the purposes of paragraph (a) any such vendor shall not cease to satisfy the requirements of subsection (2) where the total value of the vendor’s taxable supplies has exceeded or, as the case may be, will exceed the amount specified for the purposes of subsection (2)(b) solely as a consequence of—

(aa)any cessation of or any substantial and permanent reduction in the size or scale of any enterprise carried on by the vendor; or

(bb)the replacement of any plant or other capital asset used in any enterprise carried on by the vendor; or

(cc)abnormal circumstances of a temporary nature.

(4)Where a vendor changes from an invoice basis to a payments basis or from a payments basis to an invoice basis he shall furnish to the Commissioner particulars in the prescribed form calculating the tax payable or refundable in respect of the change in the basis of accounting.

(5)Any vendor to whom subsection (4) applies shall, within the time allowed under this Act for the payment of tax in respect of the changeover period, pay to the Commissioner the tax payable as calculated in accordance with this section.

(6)Where a vendor changes from an invoice basis to a payments basis, the tax payable shall, for the purposes of subsection (5), be—

(a)an amount equal to the aggregate of the input tax deducted under section 16(3) in relation to the tax periods up to and including the tax period immediately preceding the changeover period, to the extent that that amount exceeds the aggregate amount of input tax that would have been deducted if the vendor had, for those tax periods, been accounting for tax payable on a payments basis,

reduced by—

(b)an amount equal to the aggregate of the output tax accounted for under section 16(3) in relation to the tax periods up to and including the tax period immediately preceding the changeover period, to the extent that that amount exceeds the aggregate amount of output tax that would have been accounted for if the vendor had, for those tax periods, been accounting for tax payable on a payments basis.

(7)Where a vendor changes from a payments basis to an invoice basis, the tax payable shall, for the purposes of subsection (5), be—

(a)an amount equal to the aggregate amount of output tax that would have been accounted for under section 16(3) if the vendor had, in relation to the tax periods up to and including the tax period immediately preceding the changeover period, been accounting for tax payable on an invoice basis, to the extent that that amount exceeds the aggregate of the output tax accounted for in those tax periods,

reduced by—

(b)an amount equal to the aggregate amount of input tax that would have been deducted under section 16(3) if the vendor had, in relation to the tax periods up to and including the tax period immediately preceding the changeover period, been accounting for tax payable on an invoice basis, to the extent that that amount of input tax exceeds the aggregate amount of input tax deducted in those tax periods.

(8)If, in relation to any particulars required to be furnished under subsection (4), the amount referred to in subsection (6)(b) exceeds the amount referred to in subsection (6)(a) or the amount referred to in subsection (7)(b) exceeds the amount referred to in subsection (7)(a), the amount of the excess shall be refundable to the vendor by the Commissioner in respect of the changeover period as provided in section 44(1), read with section 16(5).

(9)Where a vendor’s basis of accounting is changed as contemplated in subsection (2) or (3), the vendor shall prepare lists of debtors and creditors in relation to the vendor's enterprise showing the amounts owing by such debtors and the amounts owing to such creditors as at the end of the tax period immediately preceding the changeover period.

16. Calculation of tax payable

(1)The tax payable by a vendor shall be calculated by him in accordance with the provisions of this section in respect of each tax period during which he has carried on an enterprise in respect of which he is registered or is required to be registered in terms of section 23.

(2)No deduction of input tax shall be made in terms of this Act in respect of a supply, unless—

(a)a tax invoice or debit note or credit note in relation to that supply has been provided in accordance with section 20 or 21 and is held by the vendor making that deduction at the time that any return in respect of that supply is furnished; or

(b)a tax invoice is in terms of section 20(6) or (7) not required to be issued, or a debit note or credit note is in terms of section 21 not required to be issued; or

(c)sufficient records are maintained as required by section 20(8) where the supply is a supply of second-hand goods or a supply of goods as contemplated in section 8(10) and in either case is a supply to which that section relates:

Provided that where a tax invoice or debit note or credit note in relation to that supply has been provided in accordance with this Act, the Commissioner may determine that no deduction for input tax in relation to that supply shall be made unless that tax invoice or debit note or credit note is retained in accordance with the provisions of section 55(2).

(3)Subject to the provisions of subsection (2) of this section and the provisions of sections 15 and 17, the amount of tax payable in respect of a tax period shall be calculated by deducting from the sum of the amounts of output tax of the vendor which are attributable to that period, as determined under subsection (4), and the amounts (if any) received by the vendor during that period by way of refunds of tax charged under section 7(1)(b) and (c) and 7(3)(a), the following amounts, namely—

(a)in the case of a vendor who is in terms of section 15 required to account for tax payable on an invoice basis, the amounts of input tax—

(i)in respect of supplies of goods and services (not being supplies of second-hand goods to which paragraph (b) of the definition of "input tax" in section 1 applies) made to the vendor during that tax period;

(ii)in respect of supplies of second-hand goods to which paragraph (b) of the definition of "input tax" in section 1 applies, to the extent that payment in respect of those supplies has been made during that tax period;

(iii)charged in terms of section 7(1)(b) in respect of goods imported into the Republic by the vendor and invoiced or paid, whichever is the earlier, during that tax period;

(iv)charged in terms of section 7(3)(a) in respect of goods subject to excise duty as contemplated in that section and invoiced or paid, whichever is the earlier, during that tax period;

(v)calculated in accordance with section 21(2)(b) or 21(7) or section 22, as applicable to the vendor;

(b)in the case of a vendor who is in terms of section 15 required to account for tax payable on a payments basis, the amounts of input tax—

(i)in respect of supplies of goods and services made to the vendor in respect of which the provisions of section 9(1), 9(3)(a), 9(3)(b) or 9(4) apply, to the extent that payments of consideration in respect of such supplies have been made during the tax period;

(ii)charged in terms of section 7(1)(b) in respect of goods imported into the Republic by the vendor or in terms of section 7(3)(a) in respect of goods subject to excise duty as contemplated in that section and paid by the vendor during the tax period;

(iii)in respect of supplies of goods and services made to the vendor during the tax period, excluding supplies of goods and services to which subparagraph (i) of this paragraph applies;

(iv)calculated in accordance with section 21(2)(b) or 21(7), as applicable to the vendor, to the extent that payments in respect of the tax so calculated have been made during the tax period;

(v)calculated in accordance with section 22, as applicable to the vendor;

(c)an amount equal to the tax fraction of any payment made during the tax period by the vendor to indemnify another person in terms of any contract of insurance: Provided that this paragraph—

(i)shall only apply where the supply of that contract of insurance is a taxable supply or where the supply of that contract of insurance would have been a taxable supply if the time of performance of that Supply had been on or after the commencement date;

(ii)shall not apply where that payment is in respect of the supply of goods or services to the vendor or the importation of any goods by the vendor;

(iii)shall not apply where the supply of that contract of insurance is a supply charged with tax at the rate of zero per cent under section 11 and that other person is, at the time that that payment is made, not a vendor and not a resident of the Republic;

(iv)shall not apply where that payment results from a supply of goods or services to that other person where those goods are situated outside the Republic or those services are physically performed elsewhere than in the Republic or a specified country at the time of that supply;

(d)an amount equal to the tax fraction of any amount paid by the supplier of the services contemplated in section 8(13) as a prize or winnings to the recipient of such services;

(e)an amount equal to the tax fraction of any amount of tax on totalizator transactions or tax on betting levied and paid for the benefit of any Provincial Revenue Fund by the supplier of the services contemplated in section 8(13);

(f)the amounts calculated in accordance with section 18(4) or (5) in relation to any goods or services applied during the tax period as contemplated in that section;

(g)any amount of input tax in relation to any supply in respect of which paragraph (a) of, or the proviso to, subsection (2) of this section has operated to deny a deduction of input tax and the vendor has obtained, during the tax period, a tax invoice in relation to that supply; and

(h)in the case of a vendor who has supplied goods or services or who is deemed to have supplied goods or services during that tax period in terms of section 18(1), an amount determined in accordance with the formula

in which formula—

"A"represents the tax fraction;

"B"represents the lesser of—

(i)

(aa)the cost of those goods or services, including any tax charged in respect of those goods or services; or

(bb)where the vendor was at some time after the acquisition of such goods or services deemed under section 18(4) to have been supplied with such goods or services, the amount which was represented by "B" in the formula contemplated in section 18(4) when such goods or services were deemed to be supplied to the vendor; or

(cc)where the vendor was at some time after the acquisition of such goods or services required to make an adjustment contemplated in section 18(2) or (5), the amounts then represented by "A" in the formula contemplated in section 10(9) or "B" in the formula contemplated in section 18(5) respectively, in the most recent adjustment made in terms of section 18(2) or (5) by the vendor prior to such supply of goods or services; and

(ii)the open market value of the supply of those goods or services at the time those goods or services are deemed to be supplied; and

"C"represents the percentage that, immediately before the time contemplated in section 9(6), the use or application of the goods or services for the purpose other than that of making taxable supplies was of the total use or application of the goods or services:

Provided that where any vendor is entitled under the preceding provisions of this subsection to deduct any amount in respect of any tax period from the said sum, the vendor may deduct that amount from the amount of output tax attributable to any later tax period to the extent that it has not previously been deducted by the vendor under this subsection: Provided further that the amount of input tax which, in relation to any supply of goods or services to a vendor, the vendor may deduct in respect of any payment referred to in paragraph (a)(ii) or (b)(i) of this subsection, shall be an amount which bears to the full amount of the input tax relating to that supply the same ratio as the amount of the payment bears to the full value on which tax was payable in respect of the supply.

(4)For the purposes of subsection (3), output tax in relation to a supply made by a vendor shall be attributable to a tax period—

(a)in the case of a vendor who is in terms of section 15 required to account for tax payable on an invoice basis, where a supply is made or is deemed to be made by him during the tax period; or

(b)in the case of a vendor who is in terms of section 15 required to account for tax payable on a payments basis—

(i)to the extent that payment of consideration has been received by the vendor during the tax period in respect of a supply of goods or services in respect of which the provisions of section 9(1), 9(3)(a), 9(3)(d), 21(2)(a) or 21(6) apply;

(ii)where a supply of goods or services is made or deemed to be made during the tax period by that vendor, not being a supply of goods or services to which subparagraph (i) of this paragraph applies.

(5)If, in relation to any tax period of any vendor, the aggregate of the amounts that may be deducted under subsection (3) from the sum referred to in that subsection, the amount (if any) refundable to the vendor under section 15(8), the amount (if any) brought forward from the tax period preceding the first-mentioned tax period as provided in paragraph (ii) of the proviso to section 44(1) and the amount (if any) credited under section 44(4) to the vendor’s account during the first-mentioned tax period, exceeds the said sum, the amount of the excess shall, subject to the provisions of this Act, be refundable to the vendor by the Commissioner as provided in section 44(1).

17. Permissible deductions in respect of input tax

(1)Where goods or services are acquired or imported by a vendor partly for consumption, use or supply (hereinafter referred to as the intended use) in the course of making taxable supplies and partly for another intended use and tax has become payable in respect of the supply to him or the importation by him, as the case may be, of such goods or services or in respect of such goods under section 7(3), the extent to which such tax is input tax as contemplated in the definition of "input tax" in section 1 shall be an amount which bears to the full amount of such tax the same ratto as the intended use of such goods or services in the course of making taxable supplies bears to the total intended use of such goods or services: Provided that—

(i)where the intended use of goods or services in the course of making taxable supplies is equal to not less than 90 per cent of the total intended use of such goods or services, the goods or services concerned shall for the purposes of this Act be deemed to have been acquired wholly for the purpose of making taxable supplies; and

(ii)where goods or services are deemed by section 9(3)(b) to be successively supplied, the extent to which the tax relating to any payment referred to in that section is input tax may be estimated where the calculation cannot be made accurately until the completion of the supply of the goods or services, and in such case such estimate shall be adjusted on completion of the supply, any amount of input tax which has been overestimated being accounted for as output tax in the tax period during which the completion occurs and any amount of input tax which has been underestimated being accounted for as input tax in that period.

(2)Notwithstanding anything in this Act to the contrary, a vendor shall not be entitled to deduct from the sum of the amounts of output tax and refunds contemplated in section 16(3), any amount of input tax—

(a)in respect of goods or services acquired by such vendor for the purposes of entertainment: Provided that this paragraph shall not apply where—

(i)such goods or services are acquired by the vendor wholly or partly for making taxable supplies in the ordinary course of an enterprise which continuously or regularly supplies entertainment for a consideration and for which supply of entertainment a charge which covers the cost of such entertainment is made by such vendor to the recipient;

(ii)such goods or services are acquired by the vendor for the consumption or enjoyment by an employee or office holder of such vendor in respect of personal subsistence in respect of any night that such employee or office holder is by reason of the duties of his employment or office obliged to spend away from his usual place of residence in the Republic;

(iii)such goods or services consist of a meal or refreshment supplied by the vendor as operator of any conveyance to a passenger in such conveyance during a journey, where such meal or refreshment is supplied as part of or in conjunction with the transport service supplied by the vendor, where the supply of such service is a taxable supply;

(iv)such goods or services consist of a meal or refreshment supplied by the vendor as organizer of a meeting, seminar or similar event to a participant in such meeting, seminar or similar event, the supply of such meal or refreshment is made during the course of or immediately before or after such meeting, seminar or similar event and a charge which covers the cost of such meal or refreshment is made by the vendor to the recipient;

(v)such goods or services are acquired by a local authority for the purpose of providing sporting or recreational facilities or public amenities to the public; or

(b)in respect of any fees or subscriptions paid by the vendor in respect of membership of any club, association or society of a sporting, social or recreational nature; or

(c)in respect of any motor car supplied to or imported by the vendor: Provided that this paragraph shall not apply where such motor car is acquired by the vendor exclusively for the purpose of making a taxable supply of such motor car in the ordinary course of an enterprise which continuously or regularly supplies motor cars, whether such supply is made by way of sale or under an instalment credit agreement or by way of rental agreement at an economic rental consideration: Provided further that for the purposes of this paragraph a motor car acquired by such vendor for demonstration purposes or for temporary use prior to a taxable supply by such vendor shall be deemed to be acquired exclusively for the purpose of making a taxable supply.

(3)Notwithstanding anything in section 16(4), where a vendor has made a supply of goods as contemplated in section 8(10) and in respect of the acquisition thereof by the vendor a deduction of input tax under section 16(3) was denied in terms of subsection (2) of this section, the vendor shall not be required to account for output tax in relation to such supply.

18. Adjustments

(1)Subject to the provisions of section 8(2), where—

(a)goods or services have been supplied to or imported by a vendor; or

(b)goods have been manufactured, assembled, constructed or produced by him; or

(c)goods or services were deemed by subsection (4) to have been supplied to him,

(2)Where—

(a)goods or services have been supplied to or imported by a vendor; or

(b)goods have been manufactured, assembled, constructed or produced by him; or

(c)goods or services were deemed by subsection (4) to have been supplied to him,

(not being goods or services in respect of the acquisition of which by the vendor a deduction of input tax was denied by section 17(2) or would have been denied if this Act had been applicable prior to the commencement date) and such goods or services were acquired, manufactured, assembled, constructed or produced by such vendor wholly or partly for the purpose of consumption, use or supply in the course of making taxable supplies, such goods or services shall, if the extent of the application or use of such goods or services in the course of making taxable supplies is subsequently reduced in relation to their total application or use, be deemed to have been supplied by him by way of a taxable supply by him in the course of his enterprise at the time at which such reduction is deemed by subsection (6) to take place: Provided that this subsection shall not apply to any goods or services which cost less than R40 000 or where such goods or services were deemed to be supplied to the vendor by subsection (4) if the amount which was represented by "B" in the formula contemplated in that subsection was less than R40 000 when such goods or services were deemed to be supplied to such vendor.

(3)Notwithstanding anything in this section, to the extent that any vendor has or is deemed to have granted a benefit or advantage to an employee or the holder of any office as contemplated in paragraph (i) of the definition of "gross income" in section 1 of the Income Tax Act, read with the Seventh Schedule to that Act, the granting of that benefit or advantage shall be deemed to be a supply of goods or services made by the vendor in the course of an enterprise carried on by the vendor: Provided that this subsection shall not apply to any such benefit or advantage to the extent that it has arisen by virtue of any supply of goods or services which is an exempt supply in terms of section 12 of this Act or is a supply which is charged with tax at the rate of zero per cent in terms of section 11 of this Act or in so far as it consists of a subsidy in respect of any loan or interest thereon granted to the employee or the holder of an office or if it consists of a benefit or advantage referred to in paragraph 2(c) of the said Schedule: Provided further that this subsection shall not apply to any such benefit or advantage to the extent that it is granted by the vendor in the course of making exempt supplies.

(4)For the purposes of this Act, where no deduction has been made in terms of section 16(3) in respect of or in relation to goods or services (not being goods or services in respect of the acquisition of which by a person a deduction of input tax was denied or would have been denied by section 17(2) if this Act had been applicable prior to the commencement date) acquired, manufactured, assembled, contracted or produced after the commencement date by a person or where a vendor was deemed by subsection (1) or section 8(2) to have made a taxable supply of goods or services and such goods or services are subsequently applied in any tax period by that person or, where he is a member of a partnership, by the partnership, wholly or partly for consumption, use or supply in the course of making taxable supplies, those goods or services shall be deemed to be supplied in that tax period to that person or the partnership, as the case may be, and the Commissioner shall allow that person or the partnership, as the case may be, to make a deduction in terms of section 16(3) of an amount determined in accordance with the formula

in which formula—

"A"represents the tax fraction;

"B"represents the lesser of—

(i)the cost of those goods or services, including any tax charged in respect of those goods or services; and

(ii)the open market value of the supply of those goods or services at the time when the supply is deemed to be made; and

"C"represents the ratio that, immediately after the supply so deemed to be made, the intended use of the goods or services (as contemplated in section 17(1)) in the course of making taxable supplies bears to the total intended use of those goods or services, expressed as a percentage: Provided that where the intended use of goods or services in the course of making taxable supplies is equal to not less than 90 per cent of the total intended use of such goods or services such percentage shall be deemed to be 100 per cent.

(5)Where—

(a)goods or services have been supplied to or imported by a vendor; or

(b)goods have been manufactured, assembled, constructed or produced by him; or

(c)goods or services are deemed by subsection (4) to have been supplied to him,

(not being goods or services in respect of the acquisition of which by the vendor a deduction of input tax was denied by section 17(2) or would have been denied if this Act had been applicable prior to the commencement date) and such goods or services were acquired, manufactured, assembled, constructed or produced or applied by such vendor partly for the purpose of consumption, use or supply in the course of making taxable supplies, such goods or services shall, if the extent of the application or use of such goods or services in the course of making taxable supplies is subsequently increased in relation to their total application or use, be deemed to be supplied to him and the Commissioner shall allow the vendor to make a deduction in terms of section 16(3), in the tax period during which such increase is deemed by subsection (6) to take place, of an amount determined in accordance with the formula

in which formula—

"A"represents the tax fraction;

"B"represents the lesser of—

(i)

(aa)the cost to the vendor of the acquisition, manufacture, assembly, construction or production of those goods or services; or

(bb)where goods or services were deemed by subsection (4) to have been supplied to the vendor, the amount which was represented by "B" in the formula contemplated in that subsection when such goods or services were deemed to be supplied to the vendor; or

(cc)where the vendor was at some time after the acquisition of the goods or services required to make an adjustment contemplated in subsection (2) or this subsection the amounts represented by "A" in the formula contemplated in section 10(9) or by "B" in the formula contemplated in this subsection respectively, in the most recent adjustment made under subsection (2) or this subsection by the vendor prior to such supply of goods or services so deemed to be made; and

(ii)the open market value of the supply of those goods or services at the time any increase in the extent of the use or application of the goods or services is deemed by subsection (6) to take place;

"C"represents the percentage that, during the 12 month period during which the increase in use or application of the goods or services is deemed to take place, the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of the goods: Provided that where the said percentage does not exceed the percentage contemplated in "D" by more than 10 per cent the said percentage shall be deemed to be the percentage determined in "D";

"D"represents the percentage that the use or application of the goods or services for the purposes of making taxable supplies was of the total use or application of such goods or services determined in terms of section 17(1), section 10(9) or subsection (4) of this section or this subsection, whichever was applicable in the period immediately preceding the 12 month period contemplated in "C":

Provided that this subsection shall not apply to any goods or services which cost less than R40 000 or where such goods or services were deemed to be supplied to the person by subsection (4) if the amount which was represented by "B" in the formula contemplated in that subsection was less than R40 000 when such goods or services were deemed to be supplied to such person.

(6)For the purposes of subsections (2) and (5), any reduction or increase in the extent of the application or use of goods or services shall be deemed to take place on the last day of the vendor’s year of assessment as defined in section 1 of the Income Tax Act or, if the vendor is not an income tax payer, on the last day of February: Provided that where a vendor who is not an income tax payer draws up annual financial statements in respect of a year or other period ending on a date other than the last day of February any reduction or increase in the extent of the application or use of goods or services shall be deemed to take place on such first-mentioned date.

(7)For the purposes of subsections (2) and (5) of this section, the extent of the application or use of any goods or services for the purpose of making taxable supplies shall be determined with reference to the application or use of such goods or services during the 12 month period ending on the day any reduction or increase in the extent of the application or use of such goods or services is deemed by subsection (6) to have taken place: Provided that where any goods or services are acquired, manufactured, assembled, constructed or produced by a vendor or are deemed under subsection (4) to have been supplied to that vendor during such 12 month period, the extent of the application or use of such goods or services shall be determined with reference to the period ending on the day contemplated in subsection (6) and commencing on the date such goods or services are acquired, manufactured, assembled, constructed or produced by the vendor or are deemed to be supplied to the vendor under subsection (4): Provided further that where the period between the commencement date and the dace contemplated in subsection (6) is less than a 12 month period it shall for the purposes of this section be deemed to be a 12 month period.

19. Goods or services acquired before incorporation

Any company, being a vendor, shall, where any amount of tax has been charged in terms of section 7 in relation to the acquisition of goods or services for or on behalf of that company or in connection with the incorporation of that company, and those goods or services were acquired prior to incorporation by a person who—

(a)was reimbursed by the company for the whole amount of the consideration paid for the goods or services; and

(b)acquired those goods or services for the purpose of an enterprise to be carried on by the company and has not used those goods or services for any purpose other than carrying on such enterprise,

be deemed to be the recipient of the goods or services and to have paid the tax so charged as if the supply or the payment of the tax had been made during the tax period in which the reimbursement referred to in paragraph (a) is made: Provided that this section shall not apply in relation to any goods or services where—

(i)the supply of those goods or services by that person to the company is a taxable supply, or is a supply of second-hand goods not being a taxable supply; or

(ii)those goods or services were so acquired more than six months prior to the date of incorporation of the company; or

(iii)the company does not hold sufficient records to establish the particulars relating to the deduction to be made.

20. Tax invoices

(1)Except as otherwise provided in this section, a supplier, being a registered vendor, making a taxable supply (other than a supply contemplated in section 8(10)) to a recipient, being a registered vendor, shall, at the request of the recipient, provide that recipient, within 21 days after receiving that request, with a tax invoice containing such particulars as are specified in this section: Provided that—

(i)it shall not be lawful to issue more than one tax invoice for each taxable supply;

(ii)if a vendor claims to have lost the original tax invoice, the supplier or the recipient, as the case may be, may provide a copy clearly marked "copy".

(2)Where a recipient, being a registered vendor, creates a document containing the particulars specified in this section and purporting to be a tax invoice in respect of a taxable supply of goods or services made to the recipient by a supplier, being a registered vendor, that document shall be deemed to be a tax invoice provided by the supplier under subsection (1) of this section where—

(a)the Commissioner has granted prior approval for the issue of such documents by a recipient or recipients of a specified class in relation to the taxable supplies or taxable supplies of a specified category to which the documents relate; and

(b)the supplier and the recipient agree that the supplier shall not issue a tax invoice in respect of any taxable supply to which this subsection applies; and

(c)such document is provided to the supplier and a copy thereof is retained by the recipient:

Provided that where a tax invoice is issued in accordance with this subsection, any tax invoice issued by the supplier in respect of that taxable supply shall be deemed not to be a tax invoice for the purposes of this Act.

(3)Where a supply of goods is deemed by section 8(10) to be made and both the recipient and the supplier in relation to that supply are registered vendors, the recipient shall, within 21 days after the day on which such supply is deemed by section 9(8) to be made, create and furnish to the supplier a document which Contains the particulars specified in this section, and such document shall for the purposes of this Act be deemed to be a tax invoice provided by the supplier under subsection (1) of this section.

(4)Except as the Commissioner may otherwise allow, and subject to this section, a tax invoice shall contain the following particulars:

(a)The words "tax invoice" in a prominent place;

(b)the name, address and registration number of the supplier;

(c)the name and address of the recipient;

(d)an individual serialized number and the date upon which the tax in voice is issued;

(e)a description of the goods or services supplied;

(f)the quantity or volume of the goods or services supplied;

(g)either—

(i)the total amount of the tax charged, the consideration, excluding tax, and the consideration, inclusive of tax, for the supply; or

(ii)where the amount of tax charged is calculated by applying the tax fraction to the consideration, the consideration for the supply, a statement that it includes a charge in respect of the tax and the rate at which the tax was charged.

(5)Notwithstanding anything in subsection (4), where the consideration in money for a supply does not exceed R200, a tax invoice shall contain the particulars specified in that subsection or the following particulars:

(a)The words "tax invoice" in a prominent place;

(b)the name and registration number of the supplier;

(c)an individual serialized number and the date upon which the tax invoice is issued;

(d)a description of the goods or services supplied;

(e)the consideration for the supply and either the amount of tax charged or a statement that it includes a charge in respect of tax:

Provided that this subsection shall not apply to a supply that is charged with tax under section 11.

(6)Notwithstanding any other provision of this Act, a supplier shall not be required to provide a tax invoice if the total consideration for a supply is in money and does not exceed R20.

(7)Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supplies, and that it would be impractical to require that a full tax invoice be issued in terms of this section, the Commissioner may, subject to such conditions as the Commissioner may consider necessary, direct—

(a)that any one or more of the particulars specified in subsection (4) or (5) shall not be contained in a tax invoice; or

(b)that a tax invoice is not required to be issued.

(8)Notwithstanding anything in this section, where a supplier makes a supply (not being a taxable supply) of second-hand goods or of goods as contemplated in section 8(10) to a recipient, being a registered vendor, the recipient shall maintain sufficient records to enable the following particulars to be ascertained:

(a)The name and address of the supplier;

(b)the date upon which the second-hand goods were acquired or the goods were repossessed, as the case may be;

(c)a description of the goods;

(d)the quantity or volume of the goods;

(e)the consideration for the supply:

Provided that this subsection shall not require that recipient to keep such records where the total consideration for that supply is in money and does not exceed R20.

21. Credit and debit notes

(1)This section shall apply where, in relation to the supply of goods or services by any registered vendor—

(a)that supply has been cancelled; or

(b)the nature of that supply has been fundamentally varied or altered; or

(c)the previously agreed consideration for that supply has been altered by agreement with the recipient, whether due to the offer of a discount or for any other reason; or

(d)the goods or services or part of the goods or services supplied (excluding a returnable container) have been returned to the supplier,

and the supplier has—

(i)provided a tax invoice in relation to that supply and the amount shown therein as tax charged on that supply is incorrect in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events; or

(ii)furnished a return in relation to the tax period in respect of which output tax on that supply is attributable, and has accounted for an incorrect amount of output tax on that supply in relation to the amount properly chargeable on that supply as a result of the occurrence of any one or more of the above-mentioned events.

(2)Where a supplier has accounted for an incorrect amount of output tax as contemplated in subsection (1), that supplier shall make an adjustment in calculating the tax payable by that supplier in the return for the tax period during which it has become apparent that the output tax is incorrect, and if—

(a)the output tax properly chargeable in relation to that supply exceeds the output tax actually accounted for by the supplier, the amount of that excess shall be deemed to be tax charged by that supplier in relation to a taxable supply attributable to the tax period in which the adjustment is to be made, and shall not be attributable to any prior tax period; or

(b)the output tax actually accounted for exceeds the output tax properly chargeable in relation to that supply, chat supplier shall make a deduction in terms of section 16(3) in respect of the amount of that excess (such amount being deemed for the purposes of that section to be input tax): Provided that the said deduction shall not be made where the excess tax has been borne by a recipient of goods or services supplied by the supplier and the recipient is not a vendor, unless the amount of the excess tax has been repaid by the supplier to the recipient, whether in cash or by way of a credit against any amount owing to the supplier by the recipient.

(3)Subject to this section, where a tax invoice has been provided as contemplated in subsection (1)(i), and—

(a)the amount shown as tax charged in that tax invoice exceeds the actual tax charged in respect of the supply concerned, the supplier shall provide the recipient with a credit note, containing the following particulars:

(i)The words "credit note" in a prominent place;

(ii)the name, address and registration number of the vendor;

(iii)the name and address of the recipient;

(iv)the date on which the credit note was issued;

(v)either—

(aa)the value of the said supply shown in the said tax invoice, the correct amount of the value of the supply, the difference between those two amounts and the tax charged in respect of that supply to the extent that it relates to the amount of that difference; or

(bb)where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the said difference and a statement that that difference includes a charge in respect of the tax;

(vi)a brief explanation of the circumstances giving rise to the issuing of the credit note;

(vii)information sufficient to identify the transaction to which the credit note refers;

(b)the actual tax charged in respect of the supply concerned exceeds the tax shown in the tax invoice as charged, the supplier shall provide the recipient with a debit note, containing the following particulars:

(i)The words "debit note" in a prominent place;

(ii)the name, address and registration number of the vendor;

(iii)the name and address of the recipient;

(iv)the date on which the debit note was issued;

(v)either—

(vi)a brief explanation of the circumstances giving rise to the issuing of the debit note;

(vii)information sufficient to identify the transaction to which the debit note refers:

Provided that—

(A)it shall not be lawful to issue more than one credit note or debit note for the amount of the excess;

(B)if any registered vendor claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked "copy";

(C)a supplier shall not be required to provide a recipient with a credit note contemplated in paragraph (a) of this subsection in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier, if the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice.

(4)Where a recipient, being a registered vendor, creates a document containing the particulars specified in this section and purporting to be a credit note or a debit note in respect of a supply of goods or services made to the recipient by a supplier, being a registered vendor, that document shall be deemed to be a credit note or, as the case may be, a debit note provided by the supplier under subsection (3) where—

(a)the Commissioner has granted prior approval for the issue of such documents by a recipient or recipients of a specified class in relation to the supplies or supplies of a specified category to which the documents relate; and

(b)the supplier and the recipient agree that the supplier shall not issue a credit note or, as the case may be, a debit note in respect of any supply to which this subsection applies; and

(c)a copy of any such document is provided to the supplier and another copy is retained by the recipient:

Provided that—

(i)where a credit note is issued in accordance with this subsection, any credit note issued by the supplier in respect of that supply shall be deemed not to be a credit note for the purposes of this Act;

(ii)where a debit note is issued in accordance with this subsection, any debit note issued by the supplier in respect of that supply shall be deemed not to be a debit note for the purposes of this Act.

(5)Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or category of supplies and that it would be impractical to require that a full credit note or debit note be issued in terms of this section, the Commissioner may, subject to any conditions that the Commissioner may consider necessary, direct—

(a)that any one or more of the particulars specified in paragraph (a) or, as the case may be, paragraph (b) of subsection (3) shall not be contained in a credit note or, as the case may be, a debit note; or

(b)that a credit note or, as the case may be, a debit note is not required to be issued.

(6)Where any recipient, being a registered vendor, has been issued with a credit note in terms of subsection (3)(a), or has written or other notice or otherwise knows that any tax invoice which the vendor holds is incorrect as a result of any one or more of the events specified in any of paragraphs (a), (b), (c) or (d) of subsection (1) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which the credit note or that notice or other knowledge, as the case may be, relates, the amount of the excess referred to in subsection (3)(a) shall be deemed to be tax charged in relation to a taxable supply made by the recipient attributable to the tax period in which the credit note was issued, or that notice or, as the case may be, other knowledge was received, to the extent that the input tax deducted exceeds the output tax properly charged.

(7)Where any recipient, being a registered vendor, has been issued with a debit note in terms of subsection (3)(b) and has made a deduction of any amount of input tax in any tax period in respect of the supply of goods or services to which that debit note relates, the recipient may, subject to the provisions of section 17, make a deduction of input tax in terms of section 16(3) in respect of the amount of the excess referred to in subsection (3)(b) in the tax period in which the debit note is issued, to the extent that the output tax properly charged exceeds the input tax deducted.

22. Irrecoverable debts

(1)Where a vendor—

(a)has made a taxable supply for consideration in money; and

(b)has furnished a return in respect of the tax period for which the output tax on the supply was payable and has properly accounted for the output tax on that supply as required under this Act; and

(c)has written off so much of the said consideration as has become irrecoverable,

the vendor may make a deduction in terms of section 16(3) of that portion of the amount of tax charged in relation to that supply as bears to the full amount of such tax the same ratio as the amount written off as irrecoverable bears to the total consideration for the supply, the deduction so made being deemed for the purposes of the said section to be input tax: Provided that—

(i)where tax charged in respect of a supply of goods under an instalment credit agreement has become irrecoverable, any deduction in terms of section 16(3) as provided for in this section, shall be restricted to the tax content of the amount which has become irrecoverable in respect of the cash value of such supply, as applicable in respect of that agreement in terms of section 10(6);

(ii)the amount which has become irrecoverable in respect of such cash value shall be deemed to be an amount equal to the balance of the cash value remaining after deducting therefrom so much of the sum of the payments made by the debtor in terms of the said agreement as, on the basis of an apportionment in accordance with the rights and obligations of the parties to the said instalment credit agreement, may properly be regarded as having been made in respect of the cash value;

(iii)the said tax content shall be an amount calculated by applying the tax fraction, as applicable at the time the said instalment credit agreement was entered into, to the amount deemed as aforesaid to be irrecoverable in respect of such cash value:

Provided further that the deduction provided for in this subsection shall not be made in terms of section 16(3)—

(i)in respect of any amount which has become irrecoverable in respect of an instalment credit agreement if the vendor has repossessed the goods supplied in terms of that agreement; or

(ii)in the case of any vendor who is required to account for tax payable on a payments basis in terms of section 15, except in relation to any supply made by him to which section 9(2)(b) or section 9(3)(c) applies.

(2)Where any amount in respect of which a deduction has been made in accordance with subsection (1) is at any time wholly or partly recovered by the vendor, that portion of the amount of such deduction as bears to the full amount of such deduction the same ratio as the amount of the irrecoverable debt recovered bears to the debt written off shall be deemed to be tax charged in relation to a taxable supply made during the tax period in which the debt is wholly or partly recovered.

Part III – Registration

23. Registration of persons making supplies in the course of enterprises

(1)Every person who, on or after the commencement date, carries on any enterprise and is not registered, becomes liable to be registered—

(a)at the end of any month where the total value of taxable supplies made by that person in the period of 12 months ending at the end of that month in the course of carrying on all enterprises has exceeded R150 000;

(b)at the commencement of any month where there are reasonable grounds for believing that the total value of the taxable supplies to be made by that person in the period of 12 months reckoned from the commencement of the said month will exceed the abovementioned amount:

Provided that the total value of the taxable supplies of the vendor within the period of 12 months referred to in subparagraph (a) or the period of 12 months referred to in subparagraph (b) shall not be deemed to have exceeded or be likely to exceed the amount of R150 000, where the Commissioner is satisfied that the said total value will exceed or is likely to exceed such amount solely as a consequence of—

(i)any cessation of, or any substantial and permanent reduction in the size or scale of, any enterprise carried on by that person; or

(ii)the replacement of any plant or other capital asset used in any enterprise carried on by that person; or

(iii)abnormal circumstances of a temporary nature.

(2)Every person who, in terms of subsection (1), becomes liable to be registered shall not later than 21 days after becoming so liable apply to the Commissioner for registration in such form as the Commissioner may approve and provide the Commissioner with such further particulars as the Commissioner may require for the purpose of registering that person.

(3)Notwithstanding the provisions of subsections (1) and (2), every person who satisfies the Commissioner that, on or after the commencement date—

(a)that person is carrying on any enterprise; or

(b)that person intends to carry on any enterprise from a specified date,

may apply to the Commissioner in the approved form for registration under this Act and provide the Commissioner with such further particulars as the Commissioner may require for the purpose of registering that person.

(4)Where any person has—

(a)applied for registration in accordance with subsection (2) or (3) and the Commissioner is satisfied that that person is eligible to be registered in terms of this Act, that person shall be a vendor for the purposes of this Act with effect from such date as the Commissioner may determine; or

(b)not applied for registration in terms of subsection (2) and the Commissioner is satisfied that that person is liable to be registered in terms of this Act, that person shall be a vendor for the purposes of this Act with effect from the date on which that person first became liable to be registered in terms of this Act: Provided that the Commissioner may, having regard to the circumstances of the case, determine that person to be a vendor from such later date as the Commissioner may consider equitable.

(5)Notwithstanding anything in this Act to the contrary, where any enterprise is carried on by any association not for gain in branches or divisions, or separate enterprises are carried on by that association, that association may apply in writing to the Commissioner for any such branch, division or separate enterprise to be deemed to be a separate person for the purposes of this section, and if every such branch, division or separate enterprise maintains an independent system of accounting and can be separately identified by reference to the nature of the activities carried on or the location of that branch, division or separate enterprise, every such branch, division or separate enterprise shall be deemed to be a separate person, and not a part of the association, and, where any such branch, division or separate enterprise is deemed to be a separate person under this subsection, any enterprise carried on by that branch or division or any separate enterprise carried on by the association shall, to that extent, be deemed not to be carried on by the association concerned.

(6)The provisions of this Act relating to the determination of the value of any supply of goods or services, whether such supply is made before or on or after the commencement date, shall apply for the purposes of this section, but no regard shall be had to any tax charged in respect of any such supply: Provided that any supply of services contemplated in section 11(2)(n) shall for the purposes of this section be deemed not to be a taxable supply.

(7)Where the Commissioner is satisfied that any person who has applied for registration in terms of subsection (3) is not eligible to be registered in terms of this Act or should not be registered by reason of the fact that such person—

(a)has no fixed place of abode or business; or

(b)does not keep proper accounting records relating to any enterprise carried on by him; or

(c)has not opened a banking account with any deposit-taking institution, mutual building society or other similar institution for the purposes of any enterprise carried on by him; or

(d)has previously been registered as a vendor in respect of any enterprise, whether in terms of this Act or in terms of the Sales Tax Act, 1978 (Act No. 103 of 1978), but failed to perform his duties under either of the said Acts in relation to such enterprise,

the Commissioner may refuse to register the said person as a vendor in terms of this Act and shall give written notice to that person of such refusal.

(8)For the purposes of this section "month" means any of the twelve portions into which any calendar year is divided.

24. Cancellation of registration

(1)Subject to the provisions of subsection (2), every vendor shall cease to be liable to be registered where the Commissioner is satisfied that the total value of the vendor’s taxable supplies in the period of 12 months commencing at the beginning of any tax period of the vendor will be not more than the amount referred to in section 23(1).

(2)Every vendor who wishes to have his registration cancelled in the circumstances contemplated in subsection (1), may request the Commissioner in writing to cancel his registration, and if the Commissioner is satisfied as contemplated in subsection (1), the Commissioner shall cancel the vendor’s registration with effect from the last day of the tax period during which the Commissioner was so satisfied, or from such other date as may be determined by the Commissioner, and shall notify the vendor of the date on which the cancellation of the registration takes effect.

(3)Every vendor who ceases to carry on all enterprises shall notify the Commissioner of that fact within 21 days of the date of such cessation and the Commissioner shall cancel the registration of such vendor with effect from the last day of the tax period during which all such enterprises ceased, or from such other date as may be determined by the Commissioner; Provided that the Commissioner shall not at any time cancel the registration of any such vendor if there are reasonable grounds for believing that the vendor will carry on any enterprise at any time within 12 months from the date of such cessation.

(4)Any notification by a vendor in terms of subsection (3) shall be made in writing to the Commissioner and shall state the date upon which that vendor ceased to carry on all enterprises and whether or not that vendor intends to carry on any enterprise within 12 months from that date.

(5)Where any person has applied for registration under section 23(3)(b) and the Commissioner has registered that person in terms of section 23(4), the Commissioner may cancel that person’s registration if that person does not carry on any enterprise on or before the date specified in that person’s application.

(6)Where any person has been registered as a vendor in consequence of an application made by him under section 23(3) and subsequent to the registration of that person as a vendor it appears to the Commissioner that such person’s registration should be cancelled by reason of any of the circumstances referred to in section 23(7), the Commissioner may cancel such person’s registration with effect from a date determined by the Commissioner: Provided that where such person lodges an objection against the Commissioner’s decision under this subsection the cancellation of that person’s registration shall not take effect until such time as the Commissioner’s decision becomes final and conclusive.

(7)The Commissioner shall give written notice to the person concerned of his decision to cancel such person’s registration in terms of this section or of his refusal to cancel such registration.

25. Vendor to notify change of status

Subject to this Act, every vendor shall within 21 days and in such form as the Commissioner may prescribe notify the Commissioner in writing of—

(a)any change in the name, address, constitution or nature of the principal enterprise or enterprises of that vendor;

(b)any change of address at or from which, or the name in which, any enterprise is carried on by that vendor;

(c)any change whereby that vendor ceases to satisfy the conditions provided in section 15(2), where the Commissioner has given a direction in respect of that vendor in terms of that section;

(d)any change whereby the provisions of section 27(3)(a) become applicable in the case of that vendor:

Provided that this section shall not apply to the notification of any changes in the ownership of any company.

26. Liabilities not affected by person ceasing to be vendor

The obligations and liabilities under this Act of any person in respect of anything done, or omitted to be done, by that person while that person is a vendor shall not be affected by the fact that that person ceases to be a vendor, or by the fact that, being registered as a vendor, the Commissioner cancels that person’s registration as a vendor.

Part IV – Returns, payments and assessments

27. Tax period

(1)For the purposes of this section—"Category A" means the category of vendors whose tax periods are periods of two months ending on the last day of the months of January, March, May, July, September and November of the calendar year;"Category B" means the category of vendors whose tax periods are periods of two months ending on the last day of the months of February, April, June, August, October and December of the calendar year;"Category C" means the category of vendors whose tax periods are periods of one month ending on the last day of each of the 12 months of the calendar year;"Category D" means the category of vendors whose tax periods are periods of six months ending on the last day of February and August of the calendar year or, where any vendor falling within this category makes written application therefor, on the last day of such other months as the Commissioner may approve.

(2)

(a)Every vendor, not being a vendor who falls within Category C or D as contemplated in subsection (3) or (4), shall fall within Category A or Category B.

(b)The Commissioner shall determine whether such vendor falls within Category A or Category B and notify the vendor accordingly.

(c)The determinations made by the Commissioner under paragraph (b) shall be made so as to ensure that approximately equal numbers of vendors fall within Category A and Category B.

(d)The Commissioner may from time to time direct that any vendor falling within Category A shall, with effect from the commencement of a future period, fall within Category B, or vice versa.

(3)A vendor shall fall within Category C if—

(a)the total value of the taxable supplies of the vendor—

(i)has in the period of 12 months ending on the last day of any month of the calendar year exceeded R30 million; or

(ii)is likely to exceed that amount in the period of 12 months beginning on the first day of any such month; or

(b)the vendor has applied in writing for the tax periods in his case to be on a monthly basis; or

(c)the vendor has repeatedly made default in performing any of his obligations in terms of this Act,

and the Commissioner has directed that, with effect from the commencement date or such later date as may be appropriate, the vendor shall fall within Category C: Provided that a vendor failing within Category C shall cease to fall within that Category with effect from the commencement of a future period notified by the Commissioner, if the vendor has applied in writing to be placed within Category A, B or D and the Commissioner is satisfied that by reason of a change in the vendor’s circumstances he satisfies the requirements of this section for placing within Category A, B or D.

(4)A vendor shall fall within Category D if—

(a)the vendor’s enterprise consists solely of agricultural, pastoral or other farming activities or the vendor is a branch, division or separate enterprise which is deemed by subsection (5) of section 23 to be a separate person for the purposes of that section and is as such registered under that section or the vendor is a branch, division or separate enterprise registered as a separate vendor under section 50(1);

(b)the activities of any such branch, division or separate enterprise consist solely of agricultural, pastoral or other farming activities and activities of that kind are not carried on in any other branch, division or separate enterprise of the vendor or the association not for gain, as the case may be, by whom a written application referred to in paragraph (e) is made;

(c)the total value of the taxable supplies of the vendor from agricultural, pastoral or other farming activities—

(i)has in the period of 12 months ending on the last day of any month of the calendar year not exceeded R1 million; and

(ii)is not likely to exceed that amount in the period of 12 months commencing at the end of the period referred to in subparagraph (i);

(d)the vendor does not fall within Category C; and

(e)the vendor whose enterprise consists solely of agricultural, pastoral or other farming activities or the vendor referred to in section 50(1) or the association not for gain referred to in section 23(5), as the case may be, has made a written application to the Commissioner, in such form as the Commissioner may prescribe, for such first-mentioned vendor or the branch, division or separate enterprise in question, as the case may be, to be placed within Category D,

and the Commissioner has directed that, with effect from the commencement date or such later date as may be appropriate, the vendor shall fall within Category D: Provided that a vendor falling within Category D shall cease to fall within that Category with effect from the commencement of a future period notified by the Commissioner, if written application is made by the person who made the application referred to in paragraph (e) for the vendor to be placed within Category A, B or C or the Commissioner is satisfied that by reason of a change in circumstances that vendor should be placed within Category A, B or C.

(5)For the purposes of subsection (3)(a) and subsection (4)(c)—

(a)the provisions of this Act relating to the determination of the value of any supply of goods or services, whether such supply is made before or on or after the commencement date, shall apply for the purposes of this paragraph, but no regard shall be had to any tax charged in respect of such supply; and

(b)the total value of the taxable supplies of a vendor within any period of 12 months referred to in subsection (3)(a) or (4)(c) shall not be deemed to have exceeded or be likely to exceed the amount of R30 million referred to in subsection (3)(a) or the amount of R1 million referred to in subsection (4)(c), as the case may be, where that total value exceeds or is likely to exceed that amount, as the case may be, solely as a consequence of—

(i)any cessation of, or any substantial or permanent reduction in the size or scale of, any enterprise carried on by the vendor; or

(ii)the replacement of any plant or other capital asset used in any enterprise carried on by the vendor; or

(iii)abnormal circumstances of a temporary nature.

(6)The tax periods applicable under this Act to any vendor shall be the tax periods applicable to the Category within which the vendor falls as contemplated in this section: Provided that—

(i)the first such period shall commence on the commencement date or, where any person becomes a vendor on a later date, such later date;

(ii)any tax period ending on the last day of a month, as applicable in respect of the relevant Category, may, instead of ending on such last day, end within seven days before or after such last day;

(iii)the first day of any tax period of the vendor subsequent to the vendor’s first tax period shall be the first day following the last day of the vendor’s preceding tax period.

28. Returns and payments of tax

(1)Every vendor shall, within the period ending on the twenty-fifth day of the first month commencing after the end of a tax period relating to such vendor or, where such tax period ends on or after the first day and before the twenty-fifth day of a month, within the period ending on such twenty-fifth day—

(a)furnish the Commissioner with a return (in such form as the Commissioner may prescribe) reflecting such information as may be required for the purpose of the calculation of tax in terms of section 16; and

(b)calculate the amounts of such tax in accordance with the said section and pay the tax payable to the Commissioner or calculate the amount of any refund due to the vendor:

Provided that where payment of the full amount of the tax is effected by means of an electronic transfer on or before the last business day of the month during which the said twenty-fifth day falls, the period within which the return is required to be rendered and the tax is required to be calculated and paid shall be deemed to end on the day on which such payment is received.

(2)Every vendor who is registered in terms of the provisions of Part III shall within the period allowed by subsection (1) of this section furnish the return referred to in that subsection in respect of each tax period relating to such vendor, whether or not tax is payable or a refund is due in respect of such period.

(3)The Commissioner may, having regard to the circumstances of any case but subject to the provisions of section 39, extend the period within which such return is to be furnished or such tax is to be paid.

(4)For the purposes of this section "month" means any of the twelve portions into which any calendar year is divided.

29. Special returns

Where goods are deemed by section 8(1) to be supplied in the course of an enterprise the person selling the goods (hereinafter referred to as the seller), whether or not the seller is a vendor, shall, within the period of 30 days after the date on which the sale was made—

(a)furnish the Commissioner with a return (in such form as the Commissioner may prescribe) reflecting—

(i)the name and address of the seller and, if registered as a vendor, his registration number;

(ii)the name and address of the person whose goods are sold (hereinafter referred to as the owner) and, if the owner is registered under this Act, the registration number of the owner;

(iii)the date of the sale;

(iv)the description and quantity of the goods sold;

(v)the selling price of the goods and the amount of tax charged in respect of the supply of goods under the sale, being the tax leviable in respect of such supply under section 7(1)(a); and

(vi)such other particulars as may be required;

(b)pay to the Commissioner the amount of tax so charged; and

(c)send or deliver to the owner a copy of the return referred to in paragraph (a),

and the seller and the owner shall exclude from any return which the seller or owner is required to furnish under section 28 the tax charged on the supply of goods under the sale in respect of which the return is furnished under this section.

30. Other returns

In addition to any return required under any other provision of this Act, the Commissioner may require any person, whether or not that person is a vendor, to furnish on his own behalf or as an agent or trustee, to the Commissioner such further or other return, in a form prescribed by the Commissioner, as and when required by the Commissioner for the purposes of this Act.

31. Assessments

(1)Where—

(a)any person fails to furnish any return as required by section 28, 29 or 30 or fails to furnish any declaration as required by section 13(4) or 14; or

(b)the Commissioner is not satisfied with any return or declaration which any person is required to furnish under a section referred to in paragraph (a); or

(c)the Commissioner has reason to believe that any person has become liable for the payment of any amount of tax but has not paid such amount; or

(d)any person, not being a vendor, supplies goods or services and represents that tax is charged on that supply; or

(e)any vendor supplies goods or services and such supply is not a taxable supply or such supply is a taxable supply in respect of which tax is chargeable at a rate of zero per cent, and in either case that vendor represents that tax is charged on such supply at a rate in excess of zero per cent,

the Commissioner may make an assessment of the amount of tax payable by the person liable for the payment of such amount of tax, and the amount of tax so assessed shall be paid by the person concerned to the Commissioner.

(2)For the purposes of subsection (1), the person liable for the payment of any amount of tax assessable by the Commissioner shall be—

(a)the person liable for the payment of such tax in terms of the provisions of section 7; or

(b)where the provisions of section 29 are applicable—

(i)the seller referred to in that section, unless the provisions of subparagraph (ii) are applicable; or

(ii)the owner referred to in that section 8(1)(b), if the said seller holds a written statement contemplated in section furnished by the said owner and that written statement is incorrect; or

(c)where subsection (1)(d) is applicable, the person referred to in that provision; or

(d)where subsection (1)(e) is applicable, the vendor referred to in that provision.

(3)In making such assessment the Commissioner may estimate the amount upon which the tax is payable.

(4)The Commissioner shall give the person concerned a written notice of such assessment, stating the amount upon which tax is payable, the amount of tax payable, the amount of any additional tax payable in terms of section 60 and the tax period (if any) in relation to which the assessment is made, and—

(a)where the assessment is made on a seller referred to in subsection (2)(b)(i), send a copy of that notice of assessment to the owner referred to in that subsection; or

(b)where the assessment is made on an owner referred to in subsection (2)(b)(ii), send a copy of that notice of assessment to the seller referred to in that subsection.

(5)The Commissioner shall, in the notice of assessment referred to in subsection (4), give notice to the person upon whom it has been made that any objection to such assessment shall be lodged or be sent so as to reach the Commissioner within 30 days after the date of such notice.

(6)For the purposes of this section, Part II, Part VI and sections 58, 59, 60 and 61—

(a)the person referred to in subsection (1)(d) shall be deemed to be a vendor; and

(b)any tax represented to be charged on any supply referred to in subsection (1)(d) or (1)(e) shall be deemed to be tax payable by the vendor concerned and the amount thereof as assessed under this section shall be paid within the period allowed by the Commissioner.

Part V – Objections and appeals

32. Objections to certain decisions or assessments

(1)Any person who is dissatisfied with—

(a)any decision given in writing by the Commissioner—

(i)in terms of section 23(7) notifying that person of the Commissioner’s refusal to register that person in terms of this Act; or

(ii)in terms of section 24(6) or (7) notifying that person of the Commissioner’s decision to cancel any registration of that person in terms of this Act or of the Commissioner’s refusal to cancel such registration; or

(iii)in terms of section 44(8) of the Commissioner’s refusal to make a refund; or

(b)any assessment made upon him under the provisions of section 31, 60 or 61,

may lodge an objection thereto with the Commissioner.

(2)Every objection shall be in writing and shall specify in detail the grounds upon which it is made.

(3)No objection shall be considered by the Commissioner which is not delivered at his office or posted to him in sufficient time to reach him within 30 days after the date on which notice of any decision or assessment against which such objection is lodged was given by the Commissioner, unless the Commissioner is satisfied that reasonable grounds exist for delay in lodging the objection: Provided that any decision of the Commissioner in the exercise of his discretion under this subsection shall be subject to objection and appeal.

(4)After having considered the objection, the Commissioner may—

(a)alter any decision pursuant thereto; or

(b)alter or reduce any assessment pursuant thereto; or

(c)disallow the objection,

and shall send to the objector a written notice of such alteration, reduction or disallowance, as the case may be.

(5)Where no objection is lodged against any decision or assessment by the Commissioner as contemplated in subsection (1), or where any objection has been disallowed or withdrawn or any decision has been altered or any assessment has been altered or reduced, as the case may be, such decision or altered decision or such assessment or altered or reduced assessment, as the case may be, shall, subject to the right of appeal hereinafter provided, be final and conclusive.

33. Appeals to special court

(1)An appeal against any decision or assessment of the Commissioner, as notified in terms of section 32(4), shall lie to the special court for hearing income tax appeals constituted under the provisions of section 83 of the Income Tax Act for the area in which the appellant resides or carries on business or, if the appellant and the Commissioner agree, for any other area.

(2)Every appeal shall be by way of a notice in writing and shall be lodged with the Commissioner within 30 days after the date of the notice mentioned in section 32(4) or, if the Commissioner has under section 71(4) withdrawn the last-mentioned notice and sent it anew, the date of the notice so sent anew: Provided that the Commissioner may, on good cause shown, condone any delay in the Lodging of any such notice of appeal within the said period: Provided further that any decision of the Commissioner in the exercise of his discretion under this subsection shall be subject to objection and appeal.

(3)At the hearing of any appeal to the special court—

(a)the appellant shall be limited to the grounds of objection stated in the notice of objection referred to in section 32(2) unless the Commissioner agrees to the amendment of such grounds or the appellant, on good cause shown prior to or at such hearing, is given leave by the special court to amend such grounds of objection within a reasonable period and on such terms as to any postponement of such hearing and costs which may result from such postponement as the court may order;

(b)the special court may inquire into and consider the matter before it and may confirm, cancel or vary any decision of the Commissioner under appeal or make any other decision which the Commissioner was empowered to make at the time the Commissioner made the decision under appeal or, in the case of any assessment, order that assessment to be altered, reduced or confirmed or, if it thinks fit, refer such matter back to the Commissioner for further investigation and reconsideration in the light of principles laid down by the court.

(4)The provisions of sections 83(8), (9), (10), (11), (12), (14), (15), (16), (17), (18) and (19), 84 and 85 of the Income Tax Act and any regulations under that Act relating to any appeal to the special court shall mutatis mutandis apply with reference to any appeal under this section.

34. Appeals against decisions of special court

(1)The appellant in proceedings before the special court referred to in section 33 or the Commissioner may in the manner provided in section 86A of the Income Tax Act appeal against any decision of that court.

(2)The provisions of section 86A of the Income Tax Act and any regulations made under that Act relating to any appeal in terms of that section shall mutatis mutandis apply with reference to any appeal under this section.

35. Members of special court not disqualified from adjudicating

A member of a special court referred to in section 33 shall not solely on account of any liability imposed upon him under this Act be deemed to be interested in any matter upon which he may be called upon to adjudicate thereunder.

36. Payment of tax pending appeal

The obligation to pay and the right to receive and recover any tax chargeable under this Act shall not, unless the Commissioner so directs, be suspended by any appeal or pending the decision of a court of law, but if any assessment is altered on appeal or in conformity with any such decision a due adjustment shall be made, amounts paid in excess being refunded with interest at such rate as may be fixed for the purposes of this section by the Minister from time to time by notice in the Gazette, and calculated from the date proved to the satisfaction of the Commissioner to be the date on which such excess was received and amounts short-paid being recoverable with penalty and interest calculated as provided in section 39(1).

37. Burden of proof

The burden of proof that any supply or importation is exempt from or not liable to any tax chargeable under this Act or is subject to tax at the rate of zero per cent or that any value upon which tax is chargeable under this Act or any amount of tax chargeable under this Act is subject to any deduction or set-off or that any amount should be deducted as input tax, shall be upon the person claiming such exemption, non-liability, rate of zero per cent, deduction or set-off, and upon the hearing of any appeal from any decision of the Commissioner, the decision shall not be reversed or altered unless it is shown by the appellant that the decision is wrong.

Part VI – Payment, recovery and refund of tax

38. Manner in which tax shall be paid

(1)Subject to the provisions of section 7(3)(c) and (d) and section 13(5) and (6), the tax payable under this Act shall be paid in full within the time allowed by section 13(4) or section 14 or section 28 or section 29, whichever is applicable.

(2)Where the Commissioner is satisfied that due to circumstances beyond the control of the person liable for the payment of the tax the amount of tax due cannot be accurately calculated within the time allowed by section 13(4) or section 14 or section 28 or section 29, whichever is applicable, the Commissioner may in his discretion and subject to such conditions as he may impose, agree to accept a payment of a deposit by such person of an amount equal to the estimated liability of such person for such tax.

(3)Such payment shall be deemed to be a provisional payment in respect of the liability of the said person for such tax, as finally determined, and when such liability is so determined any amount paid in excess shall be refundable to such person and any amount short-paid shall be recoverable from him.

39. Penalty and interest for failure to pay tax when due

(1)

(a)If any person who is liable for the payment of tax and is required to make such payment in the manner prescribed in section 28(1), fails to pay any amount of such tax within the period for the payment of such tax specified in the said provision, he shall, in addition to such amount of tax, pay—

(i)a penalty equal to 10 per cent of the said amount of tax; and

(ii)where payment of the said amount of tax is made on or after the first day of the month following the month during which the period allowed for payment of the tax ended, interest on the said amount of tax, calculated at a rate fixed by the Minister by notice in the Gazette, for each month or part of a month in the period reckoned from the said first day.

(b)Where any amount of tax has in relation to any tax period of any vendor been refunded to the vendor in terms of the provisions of section 44(1), read with section 16(5) or has in relation to that period been set off against unpaid tax in terms of the provisions of section 44(4), and such amount was in whole or in part not properly refundable to the vendor under section 16(5), so much of such amount as was not properly so refundable shall for the purposes of paragraph (a) be deemed to be an amount of tax required to be paid by the vendor within the said period.

(2)If any person who is liable for the payment of tax in accordance with the provisions of section 29 fails to pay any amount of such tax within the period allowed for the payment of such tax in terms of that section, he shall, in addition to such amount of tax, pay—