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VAT 101 – Claiming VAT back on an Employee’s Telephone Account

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Please note that this pertains to South African Revenue Services (SARS), the Value Add Tax (VAT) Act and Best Practice Requirements.

There are instances where employees are obliged to use their own resources on behalf of their employers. The VAT that has been charged in these instances can also be claimed back.

Here is the story.

Mike owns a chain of retail stores throughout South Africa. Mike employs a team of individuals who are area or regional Managers, whose function it is to spend most of their time in the stores to ensure that they are compliant in terms of the Company’s policies and procedures, that staff are trained and informed on new products and motivated to sell and to ensure that targets are achieved. George is one of these regional Managers.

Part of George’s duties is to compile and file reports to Head Office on each store that he visits. Due to the number stores that fall under George’s responsibility, time is of the essence and in short supply and there are often many weeks that George does not have time to physically get to the office and he must communicate with Head Office and his stores via e-mail from home.

Obviously in this instance, George is entitled to claim these telephone calls and Internet expenditure back from Mike’s Company. These claims would also include the VAT portion of the amounts to be claimed back.

In fact, if the truth be told, any expenses that are incurred by an employee, on behalf of the employer must be reimbursed to the employee, inclusive of VAT (of course this only applies where VAT has been charged).

The employer then would be entitled to claim (where applicable) the VAT portion of these reimbursements when they calculate their VAT from the offset between the input and output VAT.

If you are not sure about what can and can’t be claimed contact your nearest SARS office.