• Residential property rentals under a lease agreement are exempt from VAT.
• A VAT exemption applies to a VAT registered landlord refurbishing homes from second-hand or pre-loved items who you are VAT registered.
• While input tax deduction is not allowed for a “motor car”, it is allowed for vehicles like goods transportation trucks, etc.

Are you confused about value-added tax (VAT)? Don’t worry; we’ve got you covered!

Let’s break down the intricacies of where VAT applies and where exemptions are due.

One area that may cause confusion is the VAT on dwellings and motor vehicles. But don’t worry; with the right team helping you, it will be as simple as signing a document!

What about VAT on property?

Firstly, dwellings or residential property rentals under a lease agreement are exempt from VAT. This exemption also extends to housing rented by employers to employees. But it’s important to note that the exemption does not apply to commercial accommodation.

Secondly, if you’re a landlord wishing to refurbish homes from second-hand or pre-loved items and you are VAT registered, a VAT exemption applies where you can deduct those amounts from your VAT payable. But, as always, there are conditions. The goods must be “second-hand goods,” and the supplier is not registered for VAT. The purchaser must have made payment for the supply, and the vendor must be in possession of the prescribed records.

Now let’s talk about vehicles.

The VAT Act restricts vehicles with at least three wheels and are mainly used for public roads and “constructed or converted mainly or wholly for carrying passengers.”

Input tax deduction is not allowed for a “motor car”, which includes double cab bakkies, ordinary sedan type passenger vehicles, station wagons, minibuses, and SUVs. However, input tax deduction is allowed for vehicles like goods transportation trucks, single cab light and heavy delivery vehicles, motorcycles, caravans, ambulances, game viewing vehicles, hearses, buses, special purpose vehicles, and equipment such as bulldozers, graders, hysters, harvesters, and tractors.

We know, this all may seem a little foreign to a lot of you, but knowledge of VAT and how to use it to your advantage could mean paying less tax. We have built a team of experts who specialise in, amongst many things, VAT calculations for your business and personal accounting. It’s all part of having the right team and the right structure.

If you would like to find out a little bit more about how we legally pay less (or sometimes ZERO) tax, then register for one of our free online training sessions below. After that if you would like to meet with one of our consultants to structure your personal or business affairs the right way, then you can simply get in touch with us, but it’s up to you to start today!

We hope this simplified explanation helps you navigate the world of VAT with ease!