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Article by: Sandown Accountant: Kagiso Chuma


A lot of taxpayers, who’ve registered for VAT, do not claim VAT on the second-hand goods they buy, as they are unaware of the deemed input VAT provisions in the VAT Act. If you are one of them, the following article will clarify the requirements so you can claim the input VAT in your next VAT return.

In order to claim the input VAT on the second-hand goods you purchase, you need to ensure the following requirements are met:

  • The goods you purchase should be second-hand goods as defined in the Act. Second-hand goods are goods that have previously been owned and used. Goods are therefore normally assets and not trading stock, as trading stock has not previously been used.
  • The goods should be purchased from an individual or company that is not registered for VAT.
  • The seller must be a resident of South African
  • The goods must be situated in South Africa.
  • The goods purchased should be used to make taxable supplies. If a portion is used to make private supplies, the input VAT must be apportioned.
  • You can only claim the input VAT if you have paid for the goods. If you have only paid for a portion of the goods, you can only claim a portion of the input VAT.
  • You can only claim the input VAT on gold or goods containing gold if they’re resold in the same or substantially the same condition as when acquired.
  • VAT on Fixed Property can only be claimed once the property is registered in the company name and to the extent that payment towards the purchase price has been made to the seller.

Once you have established that you meet all the above requirements, complete a VAT264 form. You must keep this form for a period of five years from date of purchase.

Where the seller is an individual, obtain a copy of their ID and make a copy for your records. In the case of a company, obtain a copy of the company’s letterhead and verify the company's registration number.

The input VAT is calculated by multiplying the tax fraction (15/115) with the lower of the open market value of the goods on date of purchase or the purchase price.


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