How to claim VAT back on business expenses

What "claiming VAT back" actually means

South Africa runs a value-added tax (the standard rate is 15% at the time of writing). When a VAT-registered business sells something, it charges output VAT and pays it to SARS. When it buys something for the business, it pays input VAT. On your VAT return you offset the two: you hand over the output VAT you collected, minus the input VAT you paid. If your input VAT is higher, SARS refunds the difference.

So "claiming VAT back" simply means making sure every bit of input VAT you've legitimately paid is captured on your return. Miss a receipt and you don't lose a deduction — you literally pay SARS more than you needed to.

Who can claim?

Only a registered VAT vendor can claim input VAT. You must register once your taxable supplies (turnover) exceed R1 million in any consecutive 12-month period. You may register voluntarily once you're over R50,000. If you're not registered, you can't claim input VAT — though the full, VAT-inclusive cost may still count as an income-tax deduction (see our expense-tracking guide).

The receipt rules: R5,000 and R50

SARS won't accept just any slip for a VAT claim. What you need depends on the value of the purchase:

What a full tax invoice must show

For purchases over R5,000, SARS expects the document to contain:

• The words "tax invoice", "VAT invoice" or "invoice";
• The supplier's name, address and VAT registration number;
• The customer's name and address;
• A serial number and the date of issue;
• A description of the goods or services, and the quantity;
• The value, the VAT charged and the total — or the total with a statement that VAT is included at the standard rate.

An abridged invoice (for R5,000 or less) drops the customer's details and some line detail, but still needs the supplier's VAT number and the VAT amount or inclusive statement.

Expenses you can't claim VAT on

Some input VAT is "blocked" regardless of how good your invoice is. The main ones:

• Entertainment — meals, drinks and hospitality (with limited exceptions).
• Motor cars — VAT on most passenger vehicles can't be claimed (commercial vehicles like bakkies are treated differently).
• Club subscriptions — memberships of sporting or recreational clubs.

And, obviously, you can't claim VAT that was never charged — a purchase from a supplier who isn't VAT-registered carries no VAT to reclaim.

Keep your claimable VAT visible all year

The businesses that claim the most back are the ones that don't wait for the VAT period to end. If every receipt is captured and its VAT split out as you go, your claimable total is always ready — and you're never scrambling to find a six-week-old slip the night before a return is due.

This guide is general information, not tax advice. VAT rules, rates and thresholds change — confirm the current position with SARS or a registered tax practitioner before submitting a return.