Instructions

1. The Jurisdiction is South Africa

For each question provide

• UseValue-Added TaxAct 89 of 1991 ofSOUTH AFRICA
• Provide the legislation and section number (give the full citation of the legislation) and apply it to the facts of the question
• Provide academic commentary or journal articles (give the full citation of the journal article) and state the key points of these journal articles and apply these key points to the facts of the question.
• Provide South African cases (preferably Constitutional court cases) and apply it to the facts of the question
• Unpack the references in detail

Question 5

Unlike China and Nigeria, in South Africa, a VAT vendor may claim an input VAT deduction for __________goods/services acquired for the purpose of making taxable supplies

Question 4

Complete the statement:

Yusuf is not a VAT vendor. He has two vending machines on the Tuks campus. During the April to May 2021 VAT period, Yusuf entered into the following transactions:

Purchase Cola cans R575 (VAT incl)

Sold Cola Cans total value R750.

		Yusuf cannot claim input VAT and he does not account for output VAT. He is the final consumer in this supply chain.
		Yusuf may claim R75 input VAT and he must account for R112.50 output VAT
		Yusuf may claim R86.25 input VAT and he must account for R112.50 output VAT
		Yusuf may claim R75 input VAT and he must account for R112.50 output VAT

Question 3

Chinghong Industries manufacture industrial and agricultural waterpumps. Chinghong is based in China. During 2019, Chinghong opened a manufacturing plant in Gabarone, Botswana. At this plant, the agricultural waterpumps that are imported from China fully assembled are assembled to steel structures equipped with solar panels, batteries and converters. Chinghong distributes the solar waterpumps in Botswana, Zambia, and Namibia. Since Botswana is land-locked, Chinghong receives the fully assembled waterpumps at Durban Harbour from where the pumps are transported by road to Botswana. En route to Botswana, in Johannesburg, ABC Ltd primes the pumps with oil. Choose the most correct statement(s) from the statements below.

(i) The pumps are imported from a non-BLNS country. Accordingly, Chinghong must account for output VAT as follows:

Customs value + customs + 10% of customs value = Value for VAT + 15%

(ii) The pumps are not imported in the Republic for consumption. Chinghong does not have to account for output VAT

(iii)The pumps are imported from a non-BLNS country. Accordingly, Chinghong must account for output VAT as follows:

Customs value + customs + 10% of customs value = Value for VAT + 15%. However, Chinghong may claim the ouput VAT paid as an input VAT deduction once the pumps are exported to Botswana

(iv) The service rendered by ABC Ltd to prime the pumps with oil is subject to VAT at the standard rate because the service is supplied in South Africa.

(v) The service rendered by ABC Ltd to prime the pumps with oil is an exported service. No VAT is payable.

(ii) and (v)

(i) and (iv)

(i) and (v)

(iii) and (v)

(iii) and (iv)

(ii) only

(ii) and (iv)

Question 2

X is an auctioneer in Parys, Free State. X is a VAT vendor. X collects goods from various sources in South Africa and auctions it every Saturday. In the main, X specialises in antique furniture and farm equipment. Occasionally, the attorneys in town commissions X to sell goods from deceased and insolvent estates on auction. X does not differentiate between goods that he has acquired himself and goods that he have been commissioned to auctioned. He sells everything at the same auction.

On 15 June 2021, the executor for Y's deceased estate commissioned X to sell a 1979 Ford Cortina 3.0GLS belonging to Y's deceased estate at the next auction. X sold the vehicle to the highest bidder for R10 000. Y's estate is not a VAT vendor. The executor is not a VAT vendor.

Choose the most appropriate option below.

		The sale of the vehicle at the auction is deemed to be a sale by the auctioneer. As such, the highest bidder must pay R11 500
		Since the car is sold on auction together with other goods as a supply by the auctioneer, the sale of the vehicle at the auction is deemed to be a sale by the auctioneer. As such, the highest bidder must pay R11 500
		Since neither Y's estate nor the executor is a VAT vendor, the sale is not subject to VAT. The highest bidder must pay R10 000.
		Since the car is sold on auction together with other goods as a supply by the auctioneer, the sale of the vehicle at the auction is deemed to be a sale by the auctioneer and the highest bid is deemed to be inclusive of VAT. As such, the highest bidder pays R10 000 only.
		Since the car is sold on auction together with other goods as a supply by the auctioneer, the sale of the vehicle at the auction is deemed to be a sale by the auctioneer. As such, the highest bidder must pay R11 400

Question 1

Ahmed is a registered VAT vendor on the invoice basis. Ahmed operates a hardware store in Soshanguve, Gauteng. Recently, Ahmed entered into a lease agreement for a vacant plot in Soshanguve. The idea is to run a brick-making factory from the vacant land. Ahmed purchased all the brick-making equipment to commence with trade on 1 June 2021. On 2 May 2021, Ahmed suffered a stroke and he no longer has the energy to commence with the brick-making factory. John Masuku, also a VAT vendor, agreed to buy the brick-making factory from Ahmed for R100 000. The parties agree, in writing, as follows:

1. Both Ahmed and Masuku are registered VAT vendors;

2. Ahmed will transfer an operating brick-making factory to Masuku on 1 September 2021;

3. The brick-making factory is sold as a going concern and subject to VAT at zero per cent;

4. The pruchase price of R100 000 is inclusive of VAT at zero per cent.

On 1 September 2021, after immense struggle, Ahmed managed to complete the factory. On the same date, he handed over the factory to John Masuku.

The sale of the factory qualifies as the sale of a going concern that is subject to VAT at zero per cent.

True

False