Page 309 - Juta's Indirect Tax

PN 11/1992 VaLue-added tax act: PractIce nOtes PN 1/2001
• not a vendor; and
• not a resident of the Republic or any speci ed country.
Where the supply of goods meets all these conditions the supply may be zero-rated despite the fact that the ship is not
going to a destination in an export country.
It is important to note that in the case of a supply of goods which meets all the above requirements, the supply is
zero-rated irrespective of whether the master or owner is invoiced directly or whether the invoice is issued to an agent of the master or owner.
PRACTICE NOTE 12 of 1993 — VAT: THE ZERO-RATED SUPPLY OF BROWN BREAD
issued by
DEPARTMENT OF FINANCE
DIRECTORATE: INLAND REVENUE
OFFICE OF THE COMMISSIONER FOR INLAND REVENUE
General Notice 2300 published in Government Gazette 15288 of 3 December 1993 (SECTION 11 (1) (j) OF THE ACT)
This practice note is being issued to avoid problems of interpretation in relation to the provisions of section 11 (1) (j) of the Value-Added Tax Act, 1991, read with the Second Schedule to the Act, in terms of which brown bread is subject to VAT at the zero rate.
Brown bread is, in terms of the Second Schedule, brown bread as de ned in Regulation 1 of the Regulations in terms of Government Notice R577 published in Government Gazette 13074 of 15 March 1991. This Regulation provides that brown bread, subject to the allowable deviations, shall consist of a dough made from brown wheaten meal and water, with or without other ingredients that has been fermented by yeast or otherwise leavened and which has been baked in any form, size or shape.
To ensure that the tax treatment of the supply of brown bread is applied uniformly the following guidelines are furnished:
The supply (other than in the course of the provision of a meal or refreshment) of any type of brown bread shall be subject to tax at the zero rate, provided—
(i) it shall be marketed and sold under the description brown bread;
(ii) the meal content of the dough consists of at least 50 per cent brown bread meal; and
(iii) the mass of the loaf exceeds 100 grams.
Products such as ‘whole-wheat brown bread’, ‘high bre brown bread’, ‘high protein brown bread’ and ‘brown health
bread’ which satisfy the above requirements will accordingly be subject to the zero rate.
The supply of a portion of a brown bread is also subject to the zero rate, except where supplied in the course of a
provision of a meal or refreshment (such as a sandwich).
Brown bread rolls and other bread products which do not comply with the above requirements are subject to VAT at
the standard rate.
PRACTICE NOTE 13 OF 1994 – VAT: PROFESSIONAL HUNTERS AND TAXIDERMISTS
General Notice 1012 published in Government Gazette 15971 of 9 September 1994 Withdrawn by Issue 2 of Interpretation Note 81 on 9 April 2015
PRACTICE NOTE 1 of 2001 — TREATMENT OF INSURANCE INDEMNITY PAYMENTS
31 July 2001
1. This practice note is issued in order to clarify any uncertainties regarding the meaning of the provisos to section 8
(8) of the Value-Added Tax Act, 1991.
2. Section 8 (8) of the Act provides that:
‘(8) For the purposes of this Act, except section 16 (3), where a vendor receives any indemnity payment under a contract or is indemni ed under a contract of insurance by the payment of an amount of money to another person, that payment or indemni cation, as the case may be, shall, to the extent that it relates to a loss incurred in the course of carrying on an enterprise, be deemed to be consideration received for a supply of services performed on the day of receipt of that payment or on the date of payment to such other person, as the case may be, by that vendor in the course or furtherance of his enterprise: Provided that this subsection shall not apply in respect of any indemnity payment received or indemni cation under a contract of insurance where the supply of services contemplated by the contract is not a supply subject to tax under section 7 (1) (a): Provided further that this subsection shall not apply in respect of any indemnity payment received by a vendor under a contract of insurance to the extent that such payment relates to the total reinstatement of goods, stolen or damaged beyond economic repair, in respect of the acquisition of which by the vendor a deduction of input tax under section 16 (3) was denied in terms of section 17 (2) or would have been denied if these sections had been applicable prior to the commencement date.’.
3. Proviso 1
Section 7 of the Act is the section in terms of which value-added tax is levied and paragraph (a) of subsection (1)
speci cally levies VAT in respect of the supply of goods and services by a vendor in the course or furtherance of his enterprise. Even though VAT may, in terms of section 11 of the Act be levied at the rate of zero per cent, it does not alter the fact that VAT is in the rst instance levied in terms of section 7 (1) of the Act. Section 11 of the Act merely
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