Page 300 - Juta's Indirect Tax

PN 4/1991 VaLue-added tax act: PractIce nOtes PN 7/1991 notwithstanding the above rule the contractor will not have to charge or account for output tax on the retention
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amount. [See paragraph (ii) (aa) of the proviso to section 78 (5) of the Act.]
SALE OF FIXED PROPERTY
In terms of section 9 (3) (d) of the Act, a sale of xed property is deemed to take place on the earliest of—
(i) six months after the date on which the sale is entered into (or the date on which an underlying option or right
of pre-emption to acquire the property was exercised); or (ii) the date of registration of transfer of ownership; or
(iii) the date on which any payment is made in respect of the purchase price.
3.1 For the purpose of (i) above, the date on which the sale is entered into or the option or right is exercised, will be
regarded as being the date of last signature by the parties to a bona de agreement. This will apply even if the
agreement is subject to a number of suspensive conditions which are only ful lled at a later date.
3.2 The rule in 3.1 above will also apply for the purposes of section 78 (9) (a) of the Act which deems a sale of xed
property not to be a taxable supply if the agreementis concluded before 30 September 1991.
3.3 For the purposes of (iii) above, a deposit (whether refundable or not) will not be considered as ‘any payment’ unless
or until the deposit is released and applied as part payment of the purchase price or is forfeited by the purchaser.
PRACTICE NOTE 7 OF 1991 — VAT: PASSENGER TRANSPORT
issued by
DEPARTMENT OF FINANCE
DIRECTORATE: INLAND REVENUE
OFFICE OF THE COMMISSIONER FOR INLAND REVENUE General Notice 722 published in Government Gazette 14210 of 14 August 1992 [SECTION 12 (g) OF THE ACT]
1 INTRODUCTION
In terms of section 12 (g) of the Act ‘the supply by any person in the course of a transport business of any service comprising the transport by that person in a vehicle operated by him of fare paying passengers and their personal effects by road or railway’, shall be exempt from VAT (unless it is zero-rated).
The purpose of this practice note is to clarify the impact of this provison upon, particularly, bus operators in the tourism and related industries.
2 TRANSPORT BUSINESS
2.1 In order to qualify for the exemption the supplier of the transport service must be the operator of the vehicle in which the passengers are transported.
He need not be the owner of the vehicle or even the employer of the driver, but must be commercially responsible for the transporting of the passengers. He will frequently, but not necessarily, also hold a licence in terms of the Road Transportation Act.
2.2 Subject to what is said in paragraph 2.3, where the supplier of the vehicle does not operate it himself, but rents or hires it with or without fuel to a third party who uses it for the transport of passengers the nature of the supply is that of hire of the vehicle and not that of a transport service. Accordingly the consideration payable by the third party for the hire of the vehicle will be standard-rated. (The services supplied by the third party may qualify for exemption in accordance with paragraphs 2.1 and 2.4.)
2.3 Where the supplier of the vehicle referred to in paragraph 2.2 also provides the services of a driver, the agreement will usually, but not always, constitute an exempt service of transport and not a standard-rated hire. The use of such words as ‘hire’ or ‘charter’ in such an agreement is not conclusive as to its nature and each situation must be analysed on its own facts. The person to whom the driver is ultimately responsible will frequently be an important factor in this regard.
2.4 Where a person procures the services of a transport business in the form of a vehicle and driver and in turn charges passengers for transport, that person also renders an exempt transport service. This is the case even though that person does not directly own the vehicle, employ the driver or hold a road transportation licence. He carries on a transport business and operates the vehicle using sub-contracted transport services which are likewise exempt.
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FARE-PAYING PASSENGERS
In any situation where the operator of the vehicle in which passengers are transported charges a consideration in respect of the service, the passengers will be regarded as fare-paying. The term is not limited to the situation where the passenger himself pays a speci ed fare either on boarding the vehicle or on purchasing a ticket to travel in this vehicle.
4 EXAMPLES OF EXEMPT PASSENGER TRANSPORT SERVICES
4.1
4.2 4.3
Scheduled commuter bus services, intercity bus services and tourist bus transport irrespective of the distance covered or duration of the service concerned. (See paragraph 4.3.)
Ambulance services — the transport of patients for a consideration in an ambulance.
Tour buses or trains — the transport of passengers by a tour operator, irrespective of whether a speci c fee is charged for such transport or whether it is incorporated into the overall fee for the tour. (In the latter case the total fee will have to be apportioned between the fee for the taxable supplies (e.g. hotel accommodation) and the fee for
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Juta’s IndIrect tax 2016