Page 111 - ADVANCED TAXATION - Day 1 Slides
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Example (Finance Lease)
A bank enters into a finance lease on 15 May of the current tax year for the
lease of a ‘motor car’ to a clothing manufacturer, as follows:
R
Cost of motor car 98 246
VAT 13 754
112 000
Finance charges 39 200
151 200
The agreement states that 36 monthly instalments of R4 200 (including VAT)
are payable. The motor car was delivered on 1 June. The motor car is a ‘motor
car’ as defined for VAT purposes.
Discuss the VAT implications of the above transaction if both
parties have a 1 month tax period.
