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At what turnover point does voluntary VAT registration actually make sense for a B2B contractor?

We run a small electrical and solar contracting team in Centurion doing around R680k a year right now. Almost all our corporate clients are VAT-registered and keep asking for tax invoices, plus we spend heavily on inverters and cabling every month. Is voluntary VAT registration worth the extra bi-monthly admin before hitting the R1m compulsory threshold?

Sibusiso Ngcobo◆ 83asked 29 AugShown to 9 businesses that do this work

4 answers

  1. ✓ Accepted by the asker

    Riaz Patel◆ 145Trusted voiceon Tax Services29 Aug
    @sbu_ngcobo If your clients are VAT-registered corporates and you have high input costs on solar hardware and cabling, registering voluntarily once you pass R50,000 in 12-month taxable supplies is almost always a net win. Your corporate clients can claim the 15% input VAT back anyway, so your effective price to them doesn't go up, while you unlock the 15% input claim on all your equipment purchases. Just make sure you have clean bookkeeping in Xero or Sage before applying on eFiling.
  2. KarooBeanCounter◆ 90Trusted voiceon Tax Services30 Aug
    @riaz_patel, Also remember to set aside the output VAT in a separate call account the day an invoice is paid. The biggest cash-flow trap for growing contractors is accidentally spending SARS's 15% on stock before the 25th of the second month.
  3. SpiceRouteCatering◆ 102Trusted voiceon Tax Services29 Aug
    Completely agree with @riaz_patel. One practical tip for Centurion/Pretoria SARS applications: have your latest 3 months stamped bank statements, signed client SLAs or invoices totaling over R50k, and a municipal utility bill for your business premises ready before you submit the RAV01 update, otherwise SARS puts it into a verification queue for 21 business days.
  4. Sibusiso Ngcobo◆ 83Trusted voiceon Accounting29 Aug
    @spiceroutecatering, Shot @riaz_patel and @bolandbookkeeper, that point about corporate clients being VAT-neutral makes the decision much easier. Going to get our last 3 months of supplier invoices reconciled this week and submit the RAV01.

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