Question
Read the scenario below and answer the question that follows: A South African company, that sells soft drinks to wholesalers, is a registered VAT vendor.
Read the scenario below and answer the question that follows:
A South African company, that sells soft drinks to wholesalers, is a registered
VAT vendor. The VAT return for the months of November/December 2019 is due
for submission in January 2020, and needs to be compiled and be submitted to
SARS. Due to the decline in the world economy, the company's annual turnover
for the 2018/2019 year of assessment amounted to R2 500 000. They expect to
make the same turnover for the 2019/2020 year of assessment.
Below are the company's transactions for November/December:
1. Sales to South African customers: R750 000
2. Sales to a customer in Ireland: R650 000
3. Purchases: R400 000
4. Cellphone costs (business calls only): R25 000
5. Rental expense: R15 000 per month
6. Entertainment expenses: R15 000; the company entertains certain
clients during the December period.
7. Printing and stationery expenses: R2 500
8. Advertising expenses: R12 500
9. Salaries and wages: R65 000 per month.
10. On 1 December 2019, the company purchased a double cab bakkie for
R250 000, and gave an employee the right of use on the same date. The
employee does not bear any of the costs for repairs or maintenance.
During December 2019, the company spent R1 500 on insurance and
R1 200 on maintenance for the bakkie.
11. Bank charges: R700.
Note: all amounts include VAT, unless stated otherwise.
Required:
2.1 Is the company required to be registered for VAT? Provide an explanation
to support your answer. (2)
2.2 Calculate the total VAT payable/refundable the company for the
November/December VAT period. In your answer, specifically:
distinguish between output tax and input tax.
indicate whether the company will have net output VAT payable
or net input VAT receivable.
indicate if an item has a R Nil effect on the calculation and the
reason for your answer.
Note: Round off to the nearest rand. Show all your calculations, as marks
will be awarded for this. It is recommended that you
answer using the table format outlined below:
Description Calculation & reason Amount
Total output VAT
Total input VAT
Total VAT payable/receivable
(18)
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