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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: E... 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 primarily to generate additional revenue. This system allows for a more consistent and stable source of funding for public services and essential infrastructure.
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, we first determine the output VAT and input VAT:
-
Output VAT from total sales:
- Total sales including VAT: R 473,800
- Calculate Output VAT: ext{Output VAT} = rac{R 412,000 imes 15}{115} = R 61,800
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Input VAT from purchases:
- Purchases including VAT for trading stock: R 263,500
- Calculate Input VAT: ext{Input VAT} = rac{R 230,000 imes 15}{115} = R 30,000
Now, the total VAT payable to SARS is calculated as: Substituting the values: