Betty Bookkeeper gives advice about VAT on a zero-rated product – Dec 2015

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Hi Betty 

My client harvested wheat and sells this directly to AFGRI. Nothing is processed, only pure wheat grains are sold. Under my knowledge this is a zero-rated product. But AFGRI’s payment remittance advice shows that they are paying the client. Is it the wheat amount plus VAT? Do we declare this amount received from AFGRI as zero-rated or standard rate output?

Kind regards,
Abraham

Hi Abraham

According to the VAT Act, the supply of wheat is a zero-rated supply. The person making the supply (in this case your client) is the person who should issue the tax invoice on which the VAT treatment is shown. In this case VAT should be charged at 0%. The supplier is going to have an issue if they try and claim back VAT on wheat purchased, as they are not in receipt of a valid tax invoice reflecting VAT charged at 14%.

Hope that helps!

Don’t forget that I’m here to answer your questions about the ICBA, or just queries about your accounting at work. All you have to do is email me!

Bookkeepers, accountants and auditors to be regulated

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Article source: Accounting Weekly 

Following the release of the World Bank Report on the Observance of Standards and Codes – Accounting and Auditing in 2013 professional bodies have been engaging with National Treasury to give input into how the new regulatory model will work. An update on the process so far is available here.

These discussions have highlighted that the key points underpinning any regulatory review should be a consideration of:

  • International trends in regulatory reform,
  • An assessment of the pro/cons of regulating professional services,
  • The appropriate level of regulation

This approach provides a framework to evaluate and develop a regulatory model for South Africa.

A recent research paper conducted in the European Union considered the level of regulation of the accountancy profession in the EU. The paper found that high levels of regulation whether related to market entry or conduct are associated with less productivity and higher prices, and as a result tend to favour the professions and weaken consumer choice.

In the absence on any evidence of market failure or threats to consumer wellbeing in the South African market higher levels of regulation may actually be harmful and reduce net economic wealth for the state, consumers and producers.

In the SAIBA submission these points were considered and a 2 tier regulatory model proposed. This may consist of licensing auditors under a strict regulatory regime whilst allowing professional bodies to certify their member’s competency under the supervision and oversight of a regulator.

The SAIBA discussion paper and additional submission highlights the need to consider the following points prior to issuing new regulations:

  • The role of the IRBA, the effect on the Auditing Professions Act, 2005,
  • Licensing for auditors by a state agency,
  • Certification for non-audit work by professional bodies,
  • Representation of bodies within the new regulator,
  • The balance of influence between the regulator and the bodies,
  • The reservation of services to professionals such as statutory audits, Insolvency,
  • Investment advice, Preparation of financial statements for the public for a fee,
  • Compilation, Factual Findings, Review Engagements, Assurance engagements, Non statutory audits, Tax preparation, and Tax advisory services,
  • The funding model,
  • Limited liability for assurance work,
  • Protected titles,
  • Experience, Assessments, Mandatory membership, PI Insurance,
  • Review of legislative landscape to ensure consistent and relevant financial reporting, and assurance and non assurance reporting requirements, and
  • Review of legislative landscape to remove artificial and arbitrary barriers to access.

 

Reminder: CPD requirements before renewing your ICBA membership

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Please remember that it’s your responsibility as an ICBA member to achieve a minimum of 20 hours Continuing megaphone
Professional Development (CPD) points in each calendar year. You should also retain a record of your CPD activities. A Portfolio of Evidence should be maintained personally, showing receipts for learning materials and courses, and containing attendance or completion certificates.

A record sheet (CPD Tracking Form) can be downloaded here, and must be submitted to the ICBA with a proof of payment of your annual membership renewal fees. Failure to submit or complete the required CPD points could result in your membership not being renewed.

For more detailed CPD policies and procedures, please download our CPD Policy here.