Module 7 7.3 Tax periods
Vendors are required to submit returns and account for VAT to SARS according to the tax period allocated to them. Available tax periods cover one, two, four, six or twelve calendar months. Tax periods end on the last day of a calendar month.
Two-month tax period Category A Category B Category C
The two-month period ends on the last day of January, March, May, July, September and November respectively.
The two-month period ends on the last day of February, April, June, August, October and December respectively.
One-month tax period
Suppliers have to submit monthly returns and will mainly be: organisations which have a turnover of more than R30 million in any 12-month consecutive period; organisations that have applied for these terms in writing, or organisations repeatedly failing to perform any obligation as a vendor.
Six-month tax period Category D
Suppliers have to submit returns on a six-monthly basis. Mainly for farmers who deliver taxable supplies with a value of less than R1½ million per consecutive period of 12 months. Farmers in this category must submit returns on the last day of February and August each year.
Twelve-month tax period Category E
Suppliers are required to submit one return for 12 calendar months. This category is for vendors whose tax periods are periods of 12 months ending on the last day of their ‘year of assessment’ as defined in Section 1 of the Income Tax Act. The vendor must be a company or a trust fund.
Four-month tax period Category F
With effect from 1 August 2005, this tax period was introduced to assist small businesses. The four- month tax periods for each year are as follows: • March to June, to be submitted in July, • July to October, to be submitted in November, and • November to February, to be submitted in March.
These tax periods are only available to vendors that have a taxable turnover which is less than R1½ million in any consecutive period of 12 months, or which is not expected to exceed that amount during the period; and do not conduct their business under different VATregistered branches, even if the combined taxable turnover of those branches is less than R1½ million in the 12month period.
7.4 Accounting and VAT
Organisations that register as VAT payers must supply proof of VAT paid and VAT charged. There are two methods of doing this:
Invoice method
Payment method
Organisations must supply proof of VAT payment either on the date an invoice is issued, or on the date that tax is received from a customer or client, whichever is earlier. Organisations also claim input tax on taxable supplies (purchases) for cash and credit when the tax invoice is received, whether payment has been made or not.
Organisations must provide proof of VAT on purchases and sales only on the payments, which have been received or made during a specific tax period. In other words, output tax is calculated on cash received for taxable supplies during the tax period and input tax is only claimed in case of taxable supplies where the necessary tax invoice has already been received, such as on purchases which were made during the tax period. The categories of registered suppliers who qualify for the payment method of accounting are: public authorities; local authorities; non-profit-making associations/ charitable organisations, and enterprises of which taxable supplies do not exceed R2,5 million per year.
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