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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: ... show full transcript
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.
Answer
The government implemented VAT in South Africa as an additional source of revenue, providing a more stable and regular income stream. This revenue supports funding public services and essential infrastructure that benefits the community.
Step 2
Step 3
Calculate the amount payable to SARS in respect of VAT for the two months ended 30 April 2021.
Answer
To calculate the amount payable to SARS, first, determine the output VAT and input VAT:
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Calculate Output VAT:
Total sales (including VAT): R 473 800 Total sales (excluding VAT): R 412 000
Output VAT = Total sales (excluding VAT) * VAT Rate
Output VAT = R 412 000 * 0.15 = R 61 800
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Calculate Input VAT:
Purchases of trading stock (including VAT): R 263 500 Purchases of trading stock (excluding VAT): R 230 000
Input VAT = Purchases (excluding VAT) * VAT Rate
Input VAT = R 230 000 * 0.15 = R 34 500
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Calculate the VAT Payable:
VAT Payable = Output VAT - Input VAT
VAT Payable = R 61 800 - R 34 500 = R 27 300
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Add the previous balance due to SARS:
Total Amount Due: R 27 300 + R 9 450 = R 36 750