VALUE-ADDED TAX (VAT)
Hilda Groceries is registered for VAT - NSC Accounting - Question 1 - 2021 - Paper 2
Question 1
VALUE-ADDED TAX (VAT)
Hilda Groceries is registered for VAT. The standard VAT rate is 15% and is applied on most products.
REQUIRED:
1.1.1 Implementation of VAT:
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Worked Solution & Example Answer:VALUE-ADDED TAX (VAT)
Hilda Groceries is registered for VAT - NSC Accounting - Question 1 - 2021 - Paper 2
Step 1
Explain why the government implemented VAT in South Africa. State ONE point.
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Answer
The government implemented VAT as an additional source of revenue. It provides a more regular basis for funding essential public services and infrastructure.
Step 2
Explain why some products are zero-rated products. State ONE point.
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Some products are zero-rated because they are considered essential for living. This helps low-income individuals by keeping the prices of these necessities lower.
Step 3
Calculate the amount payable to SARS in respect of VAT for the two months ended 30 April 2021.
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Answer
To calculate the amount payable to SARS:
Calculate Output VAT:
Total sales: R412,000
VAT on sales: $412,000 imes rac{15}{115} = R61,800
Total Output VAT = R61,800
Calculate Input VAT:
Purchases of trading stock: R230,000
VAT on purchases: $230,000 imes rac{15}{115} = R30,000
