Page 172 - ADVANCED TAXATION - Day 1 Slides

Solution

Input tax of R2 800 (R22 800 × 14/114) is allowed on

the conversion costs. An adjustment will be allowed

in terms of s 18(9), which will result in an input tax
claim of R14 000 (R114 000 × 14/114) in relation to

the acquisition of the station-wagon. Where the

hearse is subsequently sold to another undertaker,
the supply will be subject to VAT at the standard rate

in terms of s 8(14)(b). Alternatively, where the hearse

is converted back into a station-wagon or it is no

longer used to transport deceased persons, a supply
of the hearse is deemed to be made in terms of s

8(14A).