Page 517 - Juta's Indirect Tax

BGR 012 VALUE-ADDED TAX ACT: BinDing gEnErAL rULingS BGR 013 (2)
• the generally accepted trade-in value (i.e. open market value) of the second-hand motor vehicle is paid and a discount is granted to the customer on the new vehicle; or
• a so-called ‘over-allowance’ is paid to the customer on the second-hand motor vehicle traded-in, and no discount (or a very small discount) is granted to the customer on the new vehicle purchased.
Having regard to the manner in which motor dealers conduct their business, an arrangement is hereby made in terms of section 72, to allow motor dealers to deduct input tax in terms of paragraph (b) of ‘input tax’ as de ned in section 1 (1), read with section 16 (3) (a) (ii) (aa) and 16 (3) (b) (i) on the full consideration (including any over-allowance amount) paid or credited to the supplier for a second-hand vehicle traded-in under a non-taxable supply.
This BGR is made under the following conditions:
(a) The trade-in transaction is dependent on the conclusion of a transaction for the purchase of another motor vehicle
by that customer from the same motor dealer.
(b) The parties to the transaction are trading at arm’s-length and are not ‘connected persons’ as de ned in section 1 (1).
(c) The consideration paid shall be regarded as the value of the trade-in plus the over-allowance given by the vendor.
However, this allowance given by the vendor shall not exceed the discount that is permissible on the vehicle being sold.
(d) The required records as prescribed in section 20 (8) must be retained, as well as the following:
• A detailed list of the second-hand vehicles traded in, and the subsequent sale thereof.
• A statement containing the details of the allowance/discount allowable on the vehicles to be sold.
• A statement showing the net accounting effect of the combined transactions involved (that is, the trade-in and sale).
(e) Failure on the part of the motor dealer to comply with the aforementioned conditions and the provisions of the VAT Act will result in the arrangement not being allowed or withdrawn. Furthermore, SARS reserves the right to withdraw this arrangement, should it be found that such dispensation is being misused or causing veri cation problems for SARS. In these instances the normal rules as set out in the VAT Act will apply.
4. Period for which this ruling is valid
This BGR applies with effect from 1 April 2013 and will apply for an inde nite period.
DATE: ACT: SECTION: SUBJECT:
Preamble
BINDING GENERAL RULING (VAT): 13 (Issue 2)
26 March 2014
VALUE-ADDED TAX ACT 89 OF 1991
SECTIONS 8(13), 16(3)(d), 16(4) AND 72
CALCULATION OF VAT FOR CERTAIN BETTING TRANSACTIONS
For the purposes of this ruling –
• ‘BGR’ means a binding general ruling issued under section 89 of the TaxAdministrationAct28of2011; • ‘section’ means a section of the VAT Act;
• ‘VAT Act’ means the Value-Added Tax Act No. 89 of 1991; and
• any word or expression bears the meaning ascribed to it in the VAT Act.
1. Purpose
This BGR provides direction relating to the manner in which casinos must account for value-added tax (VAT).
2. Background
The nature of betting transactions in the casino industry, especially the table game of chance (for example, Roulette, Poker), makes it dif cult to separate bets placed by customers and winnings paid to punters. It therefore follows that casinos experience practical dif culties in re ecting output tax under section 8(13), separately from input tax deducted under section 16(3)(d).
3. Ruling
An arrangement is made under section 72 to permit casinos to account for VAT by applying the tax fraction (14/114) to the net betting transactions (that is, on the amount remaining after winnings have been d educted which i s known a s the ‘net drop method’). This could result in either the casino showing a net liability payable to SARS or a refund due to the vendor. In addition, the casino will –
• not be entitled to any deductions under section 16(3)(d), on any amount paid during the tax period by the casino as a prize or winnings to the recipient of services contemplated in section 8(13), if such amount has been included in calculating the ‘net drop method’; and
• be required to maintain adequate records to enable SARS to verify the validity and accuracy of the tax liability calculated under this method.
This ruling constitutes a BGR issued under section 89 of the Tax Administration Act 28 of 2011.
4. Period for which this ruling is valid
This BGR applies with effect from 1 April 2013 and will apply for an inde nite period.
Juta’s IndIrect tax 2016 509