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 to fund essential public services and infrastructure, allowing for improved governance and service delivery.
Step 2
Explain why some products are zero-rated products. State ONE point.
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Answer
Some products are zero-rated to make essential goods more affordable for poorer communities, ensuring that all individuals can access necessary items without a significant financial burden.
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 VAT payable to SARS, we will determine the total output VAT and total input VAT:
Output VAT:
Total sales: R412,000 x 15% = R61,800
Goods returned by customers: R2,500 x 15% = R375
Total Output VAT: R61,800 + R375 = R62,175
Input VAT:
Purchases of trading stock: R230,000 x 15% = R34,500
Bad debts recovered: R140 x 15% = R21
Purchases by the owner: R1,380 x 15% = R207
Total Input VAT: R34,500 + R21 + R207 = R34,728
VAT Payable:
VAT Payable = Output VAT - Input VAT + Balance on 1 April 2021
