Page 361 - Juta's Indirect Tax

IN 39 (2) VaLue-added tax act: InterPretatIOn nOtes IN 39 (2)
‘public authority’ means—
(i) any department or division of the public service as listed in Schedules 1, 2 or 3 of the Public Service Act,
1994 (Act 103 of 1994); or
(ii) any public entity listed in Part A or C of Schedule 3 to the Public Finance Management Act, 1999 (Act 1 of
1999); or
(iii) any other public entity designated by the Minister for the purposes of this Act to be a public authority.
Transfer payment
De nition deleted.
Other de nitions
The de nition of the term ‘services’ remained unchanged, as did ‘local authority’, until it was deleted and replaced with the term ’municipality’ on 1 July 2006. A textual amendment in the de nition of the term ‘consideration’ replaced the term ‘unconditional gift’ with the term ‘donation’.
Section 8 – Certain supplies of goods or services deemed to be made or not made
• Section 8 (2) proviso (iv)
Proviso (iv) was inserted to provide relief in respect of the VAT that would arise upon deregistration of entities which fall within the de nition of a ‘public authority’ on or after 1 April 2005.
(iv) this subsection shall not apply to a vendor that is a constitutional institution listed in Schedule 1 to the Public Finance Management Act, 1999 (Act 1 of 1999) or a public authority, respectively, where that vendor (other than a vendor who applied and was registered as a vendor during the period 22 December 2003 to 31 March 2005) ceases to be a vendor as a result of—
(aa) the substitution of the de nition of ‘public authority’ in the Revenue Laws Amendment Act, 2004 or the insertion of paragraph (viii) to the proviso to the de nition of ‘enterprise’ in the Revenue Laws Amendment Act, (Act 45 of 2003); or
(bb) the re-classi cation of that vendor or part of that vendor’s activities within the Schedules to the Public Finance Management Act, 1999 (Act 1 of 1999) subsequent to the introduction of the Revenue Laws Amendment Act, 2004.
• Section 8 (5)
Section 8 (5) was amended so that it only applies to a ‘designated entity’ on or after 1 April 2005. Note that the wording below is the current wording as subsequently amended in terms of Revenue Laws Amendment Act 20 of 2006.
• Section 8 (5A)
Section 8 (5A) was inserted with effect from 1 April 2005 as a result of the amendment to section 8 (5) to deal with grants paid to vendors who are not designated entities. Note that the wording below is the current wording as subsequently amended in terms of the Revenue Laws Amendment Act 20 of 2006.
• Section 8 (23)
This provision was inserted with effect from 1 April 2005 to deal with low cost housing subsidies as a result of the deletion of the de nition of a ‘transfer payment’ and section 11 (2) (p). Note that the wording below is the current wording as subsequently amended in terms of the Taxation Laws Amendment Act (No.7 of 2010).
Section 11 (2) – Zero-rating of services
• Section 11 (2) (p)
The provision relating to transfer payments was deleted.
• Section 11 (2) (t)
This provision was inserted with effect from 1 April 2005 to provide a zero-rating of the deemed supply which arises in respect of the receipt of a ‘grant’.
(t)the services are deemed to be supplied in terms of section 8 (5A).
Juta’s IndIrect tax 2016 353
(5) For the purposes of this Act a designated entity shall be deemed to supply services to any public authority or municipality to the extent of any payment made by the public authority or municipality concerned to or on behalf of that designated entity in the course or furtherance of an enterprise carried on by that designated entity.’
(5A) For the purposes of section 11 (2) (t), a vendor (excluding a designated entity) shall be deemed to supply services to any public authority, municipality or constitutional institution listed in Schedule 1 to the Public Finance Management Act, 1999 (Act 1 of 1999) to the extent of any grant paid to or on behalf of that vendor in the course or furtherance of an enterprise carried on by that vendor.’
(23) For the purposes of this Act a vendor shall be deemed to supply services to any public authority or municipality to the extent of any payment made to or on behalf of that vendor in terms of a national housing programme contemplated in the Housing Act, 1997 (Act 107 of 1997), which is approved by the Minister by regulation after consultation with the Minister responsible for Human Settlements..’