The vendor can claim back any VAT that is paid on anything bought for the business which relates to providing a valuable service or supply. The VAT which the vendor can claim back is called an input credit.

You can only claim input credits for the amount of VAT shown on VAT invoices that you paid. Remember to file invoices to prove what you have spent money on. For example, you must keep salary slips, invoices from suppliers, slips to show how much petrol you have used if you use a car for business reasons, and so on.

John is the only member of a printing CC called Better Copy. Better Copy is registered as a vendor and charges 14% VAT on all printing jobs.

John has to give a Better Copy VAT invoice to every customer. So, if Mary wants 20 copies made Better Copy charges her R5,00 to do this. John must add 14% VAT, which would be 70c. Mary pays R5,70 and John then sends the 70c to SARS of Revenue, with all the other VAT paid by other customers over 4 months (because the turnover of his business is less than R1,2 million per year).

Better Copy decides to buy a new photocopy machine from IBM for R10 000. They pay R1 400 VAT on the machine which means they pay IBM R11 400. IBM gave Better Copy an invoice with IBM’s VAT registration number on it. Better Copy can now claim the R1 400 from SARS because Better Copy is registered as a vendor. This R1 400 is called an input credit.

At the end of January, John adds up all the VAT which he has collected from his customers. The total is R5 000, which he owes to SARS. But, he has an input credit of R1 400, which is VAT he can claim back from SARS. John subtracts the R1 400 input credit from the R5 000 collected from customers. John must pay SARS R3 600.