Page 102 - ADVANCED TAXATION - Day 1 Slides
P. 102
Solution
102
Because the vendor has purchased a second-hand bicycle from a person
not registered for VAT purposes, a deemed input tax credit can be
claimed for the second-hand bicycle. The deemed input tax credit is
based on the lower of the consideration paid (R630) or open-market
value (R780).
R
The deemed input tax is calculated as follows:
Tax fraction × consideration paid
14/114 × R630 = 77
