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RAG Auctioneers

VAT tax

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RAG Auctioneers

An interesting question:

 

"Persons who make taxable supplies in excess of R1 million (from 1 March 2009) in any 12-month consecutive period are liable for compulsory VAT registration"

 

If we sell more than R1 000 000 a year on Bidorbuy (on auction), are we obligated to pay VAT, and if so, can this charge be moved over to the buyer?

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Vinyl Lady Decals

Yes, in terms of Tax law, you are liable to pay VAT.

As far as I have read, your sales realised on BoB must already include VAT, you may not charge VAT over and above the bid won or price bought for.

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lilythepink

Tananka is perfectly correct.

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RAG Auctioneers

RAG Auctioneers is basically a huge trade broker, charging our sellers a small % on top of BOBs %.

If we had to pay VAT without charging the buyer VAT, we make 0 profit.

 

Does not make sense for us to expand past R1 000 000 turnover?

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bitesize

i'd like to get to R1 mil lol.

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lilythepink

@ RAG - there must be some way of overcoming this but I think you'd need a tax consultant's advice, rather than just my suggestion which is that you deduct VAT from the amount you would pay over to the actual owner of the goods. There has to be a way around this so that you aren't out of pocket but I think you may find yourself having to include the amount in your VAT returns.

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Libertas Computers

I agree with Lilly, get a VAT consultant... But remember VAT is very, very wide and there are lots of aspects involved in it (I only did 2 years of tax). What I can tell you though is that you are then also liable to claim back input VAT, meaning that 14/114 of the amount spent to get the item is available to be deducted. and then 14% of the sales price needs to be paid.

 

 

This is very, very basic, but I know that the price in the end shouldn't change too much if you register for VAT. You basically end up getting your products at a reduced price, if you deduct tax from the original Cost Price and then you add your percentage plus a bit for VAT..

 

Once again, I'm typing under correction, I don't have my law of tax books on me and I think VAT is only deductible if the supplier is VAT registered...

 

Make sure of the laws on the SARS VAT Website as they have a little calculation there as well. There are also certain items that are free of VAT such as milk and bread and then others that are charged at 0% VAT, so have a look at that.

 

Fred

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oryxza

RAG, are you purely charging a commission or are you purchasing and reselling product?

 

My understanding is if you are only charging a commission, your commission would need to exceed R1 million p/a to be liable to register for VAT. This is provided you are not paying for product and reselling it. ie. you never have ownership of the product.

 

Best advice of course is to speak to an accountant or find someone knoweldgeable at SARS :amazed:

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TrailerHub

Hi

I am a start up seller. Does bid or buy purchases include VAT? Do I need to invoice the buyer which reflects VAT amount that I charged him, if any.

 

 

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