Page 360 - Juta's Indirect Tax

IN 39 (2) VaLue-added tax act: InterPretatIOn nOtes IN 39 (2)
PART 2 – Wording on or after 1 April 2005 Section 1 (1) – De nitions
Enterprise
• Paragraph (b) (i)
‘Enterprise’ means—
(a) ...
(b) without limiting the applicability of paragraph (a) in respect of any activity carried on in the form of a commercial,
nancial, industrial, mining, farming, shing or professional concern—
(i) the making of supplies by any public authority of goods or services which the Minister, having regard to
the circumstances of the case, is satis ed are of the same kind or are similar to taxable supplies of goods or services which are or might be made by any person other than such public authority in the course or furtherance of any enterprise, if the Commissioner, in pursuance of a decision of the Minister under this subparagraph, has noti ed such public authority that its supplies of such goods or services are to be treated as supplies made in the course or furtherance of an enterprise.
• Proviso (viii)
The de nition of ‘enterprise’ was amended by the insertion of proviso (viii) to exclude a constitutional institution.
Designated entity
The de nition of a ‘designated entity’ was inserted to provide for all entities in which government has an interest which carry on enterprises, and to provide for welfare organisations.
...
Provided that—
...
(vii) the making of supplies by a constitutional institution listed in Schedule 1 of the Public Finance Management Act, 1999 (Act 1 of 1999), shall be deemed not to be the carrying on of an enterprise.
‘Designated entity’ means a vendor—
(i) to the extent that its supplies of goods and services of an activity carried on by that vendor are in terms of (b)
(i) of the de nition of ‘enterprise’ treated as supplies made in the course or furtherance of an enterprise;
(ii) which is a major public entity, national government business enterprise or provincial government business enterprise listed in Schedule 2 or Part B or D of Schedule 3 of the Public Finance Management Act, 1999
(Act 1 of 1999), respectively; or
(iii) which is a party to a ‘Public Private Partnership Agreement’ as de ned in Regulation 16 of the Treasury
Regulations issued in terms of section 76 of the Public Finance Management Act, 1999 (Act 1 of 1999): or;
(iv) which is a welfare organisation; or
(v) which is a municipal entity as de ned in section 1 of the Local Government: Municipal Systems Act, 2000 (Act 32 of 2000);or
(vi) which has powers similar to those of any water board listed in Part B of Schedule 3 of the Public Finance Management Act, 1999 (Act No. 1 of 1999), which would have complied with the de nition of ‘local authority’ in section 1 prior to the deletion of that de nition on 1 July 2006;
Grant
The de nition of a ‘grant’ was inserted to provide a greater degree of certainty in identifying the type of payments which are intended to qualify for zero-rated tax treatment.
‘grant’ means any appropriation, grant in aid, subsidy or contribution transferred, granted or paid to a vendor by a public authority, [local authority] municipality or constitutional institution listed in Schedule 1 to the Public Finance Management Act, 1999 (Act No. 1 of 1999), but does not include—
(a) a payment made for the supply of any goods or services to that public authority or [local authority] municipality,
including all goods or services supplied to a public authority, [local authority] municipality or constitutional institution listed in Schedule 1 to the Public Finance Management Act, 1999 (Act 1 of 1999) in accordance with a procurement process prescribed—
(i) in terms of the Regulations issued under section 76 (4) (c) of the Public Finance Management Act, 1999 (Act No. 1 of 1999); or
(ii) in terms of Chapter 11 of the Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003), or any other similar process; or
(b) a payment contemplated in section 8 (23).
Public authority
The de nition of ‘public authority’ was amended to be more speci c by including reference to the departments listed in the PSA and certain public entities listed in the PFMA.
352 Juta’s IndIrect tax 2016