What Items Can You Claim VAT Back On?

By Dave Nyam •  Updated: 01/23/24 •  5 min read

So, you’ve heard about value-added tax (VAT), right? It’s that pesky little tax that gets added to almost everything we buy or sell in South Africa. If you’re running a business that makes more than R1 million a year, you don’t have a choice – you must register as a VAT vendor. But hey, even if you’re making more than R50,000, you can still choose to register voluntarily. And since 1 April 2019, the VAT rate

has been set at 15%.

What items can you claim VAT back on?

Alright, let’s dive a bit deeper into this. You see, VAT, or Value Added Tax, is a bit like a game of tag. It’s applied to almost all services and products you provide in your business, as long as they’re used for making taxable supplies or services.

Imagine you’re running a restaurant. You visit a nearby store and purchase a sack of potatoes. Now, these humble potatoes don’t attract VAT. They’re just simple, earthy tubers. But then, you take these potatoes back to your kitchen. You peel them, slice them, and turn them into delicious, golden chips. Suddenly, these potatoes have transformed. They’re no longer just potatoes – they’re a product you’re selling in your restaurant. And because of that, they now attract VAT. So, you can claim VAT on the chips you sell.

Now, let’s consider another scenario. Suppose you’re renting a car for business purposes. Along with the car, you also take out insurance because, let’s face it, accidents happen. This insurance forms your business’ indispensable expense. And you know what? You can claim the VAT on this insurance.

What can you not claim VAT on in South Africa?

Now, there are certain items on which you just can’t claim VAT. Take basic foodstuffs like potatoes, for example. They’re as basic as it gets, right? And because of that, they don’t attract VAT. So, you can’t offset it.

And then there’s the case of ‘office refreshments’. You know, the tea, coffee, and snacks you have around for your staff. Unfortunately, you can’t claim VAT for these either. It’s somehow a bummer, I understand.

But wait, there’s a twist! If you’re buying refreshments for training delegates, then the game changes. In this case, you can claim VAT on those refreshments. It’s a little loophole that can come in handy.

Can you claim VAT on expenses without a receipt?

In order to claim VAT, it’s got to be included on a valid ‘Tax Invoice’. Think of this invoice as your golden ticket to claiming VAT. It’s your proof, your evidence. And this invoice is not something you can just toss in the bin after a few days. Nope, you’ve got to keep it safe and sound for the correct retention period, as laid down by law.

Now, what happens if you don’t have a receipt? Well, let’s just remark expectations get somehow tricky. Without a receipt, claiming VAT on expenses becomes a bit like trying to find a needle in a haystack. It’s difficult, to say the least. So, always remember to ask for that receipt. It’s your key to unlocking your VAT claims.

What are VAT-exempt items?

Let’s dive into the world of VAT-exempt items, shall we? Now, these are a special category of goods and services that are like the unicorns of the VAT world – they’re not charged VAT. Typically, these are basic necessities – the things we all need to get by in life. We’re talking about certain foodstuffs, water, and medical services.

Imagine going to the grocery store and filling your cart with basic food items. Or turning on the tap to fill a glass with water. Or visiting the doctor for a check-up. These are all things that fall under VAT-exempt items.

But here’s the catch – because VAT is not charged on these items, you can’t claim VAT on them. 

Final Thoughts

Let us now conclude. Understanding the South African VAT system is like playing a board game of strategy. The ability to maximize each move, quick reflexes and comprehensive rule know-how are pivotal to succeed.

The tax-deductible expenses act as the game’s “pieces.” You can get closer to your goal of maximizing your VAT reclaim by keeping track of all business-related expenses, including meals, car rentals, and workplace refreshments. However, remember that every assertion needs to be supported by evidence. Having this luck at the appropriate time is like holding the ace of spades.

But now everything begins to get complex. There are some things that can be claimed for VAT and others that can’t. It’s similar to holding a wildcard. Understanding when and how to play a card can be decisive.

The South African Revenue Service (SARS) should also not be overlooked. As the rules-maker and referee, they ensure everyone plays by the book. Following the rules set forth by SARS is crucial to the success of any VAT claim you may file.

So, don’t lose focus, and make sure your paperwork is in order. Accuracy and knowledge will go you far in mastering South Africa’s VAT system.