We just took over a client that puts through all his contributions for Retirement Annuities, Medical Aid etc through the companies books. He takes them as a salary and pays PAYE / Provisional tax on these values inclusive of VAT. So can the company claim the VAT?
Transactions subject to Exempt supplies VAT:
No VAT can be claimed on purchases (even if there is VAT on these expenses).
Financial services such as:
- The lending of money
- Provision of long-term insurance
- Provision of retirement- and medical aid benefits
- Exchange of currency
- The issue of letters of credit by banks
- Issue of debt security or unit trusts
- Sale of futures contracts
- Activities of any fund promoting horse-racing
- Supplies by associations not for gain (example: cake sales by welfare organisations)
- Letting of residential accommodation (place of residence for natural persons – house, flat or apartment for longer than 45 days continuously)
- Levies paid to Body Corporates and Share Block Companies (special levies are VAT-able, normal levies are not VAT-able)
- Transportation of passengers