Budget tips to survive the vat hike

26 March 2018
3449
Senwes Scenario

tax budget Senwes-Credit

Finance Minister Melusi Gigaba announced in his budget speech on 21 February 2018 that for the first time in 25 years, VAT will increase by one percentage point to fifteen percent as of 1 April 2018. A one percentage point increase in VAT implies that 7.1 percent more tax will be collected. For Senwes clients registered for VAT for farming purposes, this increase will have a minor effect as VAT on all major input costs can be claimed back from South African Revenue Services (SARS).

An Increase in VAT means that ultimately, more money will go towards running costs. “A 52 cents per litre increase in fuel tax will lead to higher transport costs which consequently also increases the cost of input supplies which then negatively affects the profit margins of most grains and ultimately, farming profitability”. Said Pieter Swart: Managing Executive at Senwes. Swart has tips on how farmers can adjust to the VAT hike.

Make sure your bookkeeping system is in order
Make sure that you are registered for VAT
Keep all invoices and ensure that you or your bookkeeper claims the applicable VAT. Also ensure that all invoices adhere to the VAT regulations.
Keep a good record system and ensure that your claims are done correctly. (SimiFini is a recommended bookkeeping system for farmers).

For any advice, do not hesitate to call Senwes Credit on 0184647800.