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Is VAT on commission subjected to income tax?



Nonnie says:
31 March 2022 at 2:02

If an individual who is a registered as VAT vendor acts as an Agent and earns commission ad obviously charges output tax and declares it to SARS.

I.e. Someone who has invoiced out R100.00 and declared an output tax of R13.04 to SARS, when the time comes to file their personal income tax does the person have to declare the same amount being R86.96 excluding VAT as their commission income and do they have to pay income tax on the above amount?

Will that not be double taxation?

TaxTim TaxTim says:
31 March 2022 at 17:57

A resident of South Africa is taxable on their worldwide income. The taxable income above the threshold is subject to tax at marginal rates ranging from 18 to 45 percent. To avoid double taxation, tax is levied on taxable income that consists of gross income less qualifying exemptions and allowable deductions.

Indirect taxation revenue in South Africa is value-added tax (VAT) this is when a company sells goods or provides services and pays VAT to SARS on the income received (output VAT) and expenses paid (input VAT).

Therefore, it's not double taxation as VAT is payable on commission received at a rate of 15% and the commission received is declared excluding VAT to SARS (your paying tax excluding the VAT paid) on your tax return. If you are an agent working via an agency, the agency should send you an IRP5, the amount on the IRP5 will only be the amount after VAT and not the total amount you were due once the transaction went through.

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