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IN 57 VaLue-added tax act: InterPretatIOn nOtes IN 61
Provided that where such goods consist of second-hand goods contemplated in the proviso to paragraph (b) of the de nition of ‘input tax’ in section 1, the amount determined in terms of this subsection shall not exceed the amount of transfer duty or stamp duty, as the case may be, which was or would have been payable, less any amount which has previously been deducted in terms of the provisions of subsection (3) (a) (ii) or (b) (i) of this section or section 18 (4) or (5), in respect of such acquisition, original issue or registration of transfer, as the case may be’.
Section 18A — Adjustments in consequence of acquisition of a going concern wholly or partly for purposes other than making taxable supplies
(1) Where—
(a) an enterprise or part of an enterprise has been supplied to any vendor; and
(b) the supply of such enterprise or part was charged with tax at the rate of zero per cent in terms of section 11 (1) (e); and (c) such enterprise or part, as the case may be, or any goods or services which formed part of such enterprise or part are
acquired by such vendor wholly or partly for a purpose other than for consumption, use or supply in the course of
making taxable supplies,
such enterprise, part, goods or services, as the case may be, shall be deemed to have been supplied by him by way of a taxable supply by him in the course of his enterprise: Provided that where the intended use of such enterprise, part, goods or services, as the case may be, in the course of making taxable supplies is equal to not less than 95 per cent of the total intended use of such enterprise, part, goods or services, as the case may be, the enterprise, part, goods or services concerned may for the purposes of this Act be regarded as having been acquired wholly for the purpose of consumption, use or supply in the course of making taxable supplies.
(i) the cost to such vendor of acquiring such enterprise, part, goods or services may be reduced by any amount which represents an appropriate allocation of such full cost to the acquisition of any goods or services which form part of such enterprise or part of an enterprise and in respect of the acquisition of which by the vendor a deduction of input tax would be denied in terms of section 17(2); or
(ii) where such enterprise, part, goods or services were acquired—
(aa) by means of a supply made by a vendor for no consideration or for a consideration in money which is less than
the open market value of the supply; and
(bb) in circumstances where the supplier and the recipient are connected persons,
the cost of such enterprise, part, goods or services shall be deemed to be the open market value of the supply of such enterprise, part, goods or services.
(3) Notwithstanding anything in this Act, the supply deemed by subsection (1) to have been made by the vendor shall be deemed to be made in the tax period in which the supply of the enterprise or part of an enterprise is made.
(4) For the purposes of this section and sections 10 (9), 18 (4) and (5), the cost to the vendor of any goods or services acquired by a vendor in the circumstances contemplated in subsection (1) shall be deemed to be an amount equal to the aggregate of an amount which represents an appropriate allocation of the full cost to the vendor of the enterprise or part of an enterprise to those speci c goods or services and an amount determined by applying the rate of tax applicable at the time of supply contemplated in subsection (3) to the amount of such appropriate allocation.
Interpretation Note 61 Remission of interest
DATE: ACT: SECTIONS: SUBJECT:
Preamble
29 March 2011
VALUE-ADDED TAX ACT 89 OF 1991 (THE VAT ACT) SECTION 39 (7) (a)
REMISSION OF INTEREST
In this Note—
• references to sections are to sections of the VAT Act unless otherwise stated; and
• unless the context otherwise indicates, any word or expression in this Note bears the meaning ascribed to it in the
VAT Act.
1. Purpose
This Note provides guidelines on the remission of interest imposed in terms of section 39.
2. Background
South Africa’s value-added tax (VAT) self-assessment system requires persons to provide correct information to the Commissioner to establish their VAT liability and pay the correct amount of VAT within the prescribed period. Persons who fail to meet their VAT obligations are liable to pay a penalty and interest. Section 39 imposes a penalty and interest on any VAT and additional tax which is not paid within the period contemplated in subsections (1) (a), (2), (3), (4), (6), (6A) or (8) or on the date referred to in subsection (5). In terms of section 39 (7) (a), the Commissioner has a discretion to remit interest, in whole or in part. As a result of the amendment to section 39 (7) which came into effect on 1 April 2010, the circumstances under which the interest imposed may be remitted for periods pre- and post 1 April 2010 differ. The Commissioner is therefore required to consider the applicable provisions when remitting the interest imposed for the aforementioned periods.
2.1 Pre-1 April 2010
The interest charged before 1 April 2010 in respect of the late payment of tax, may be remitted by the Commissioner where he or she is satis ed that the non-payment of VAT –
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