A VAT vendor may apply to SARS for deregistration (as a VAT vendor) under the following circumstances:
- The vendor no longer meets the requirements required to register for VAT (e.g. the required threshold turnover of R1 million has not been reached and is not anticipated going forward)
- The vendor ceases to carry on an enterprise (as defined by SARS)
Should either of the above apply, the procedure to deregister as a VAT vendor include the following:
- A form VAT123e (obtainable from SARS) needs to be completed and submitted to SARS.
- Section 8(2) of the VAT Act states that if a vendor deregisters for VAT, he/she is liable for output VAT on goods or rights (e.g. patents) owned on the date of registration. Also, the vendor must account for output VAT on the amounts due to creditors (accounts payable) on which the vendor claimed input VAT within a period of twelve months before deregistration.
- The total amount of the business assets shall be subject to VAT output on deregistration.
- NB: Deregistration does not absolve the vendor from VAT obligations already incurred.
The VAT payable on deregistration has to be paid to SARS within 6 months of deregistration where a vendor deregisters solely because the total value of taxable supplies has not exceeded the voluntary threshold of R50,000 or the compulsory threshold of R1million.
Based on the above, it is therefore important that a vendor carefully evaluate his/her decision to deregister for VAT. It is highly recommended that a vendor consults a person that is fully conversant with VAT Act (e.g. his/her accountant or an independent tax consultant) before embarking on a deregistration process.
Contact the team at Austral Accounting on 031 5368222 for mor info, alternatively email firstname.lastname@example.org