Page 142 - ADVANCED TAXATION - Day 1 Slides

Solution

Output tax:

Step 1: R159 600 × 100/114 = R140 000
Step 2: R140 000 × 0,3% = R420

Step 3: R420 – R85 = R335

Step 4: R335 × 14/114 = R41,14
Step 5: R41,14 × 100% = R41,14 output tax payable

If the vehicle had not been a motor car but a delivery vehicle, the
employer would have been able to claim the VAT paid on the
vehicle as an input tax credit (R159 600 × 14/114 = R19 600), and
output tax would have been calculated as follows:

Step 1: R159 600 × 100/114 = R140 000
Step 2: R140 000 × 0,6% = R840

Step 3: R840 – R85 = R755

Step 4: R755 × 14/114 = R92,72
Step 5: R92,72 × 100% = R92,72 output tax payable