Greys Lodge (Pty) Ltd (Greys) is a guesthouse situated in Durban, South Africa that provides accommodation and
Question:
Greys Lodge (Pty) Ltd (“Greys”) is a guesthouse situated in Durban, South Africa that provides accommodation and breakfast to guests. Greys is registered for Value-Added Tax (VAT) and has a two-month tax period.
Set out below are transactions that took place during March and April 2019. All amounts are inclusive of VAT, unless otherwise stated.
1. Greys charges R 650 (excluding VAT) per person per night for accommodation and breakfast During March and April 2019 Greys accommodated 50 guests that stayed for two nights and 23 guests that stayed for one night
2. Three guests that usually reside in Pietermaritzburg, but sometimes work in Durban for a period of time during the year, stayed in the guesthouse for a period of 40 nights during March and April 2019 Greys provided these three guests with a special rate of R 400 (excluding VAT) per person per night
3. Greys purchased food for R 27 500. 80% of these purchases relate to meals provided to guests at Greys, and 20% for meals and refreshments provided to cleaning and kitchen staff.
4. Salaries related to kitchen and cleaning staff amounted to R 8 200 and the water and electricity account amounted to R 8 540.
5. Greys received a payment of R 5 928 in advance from Mr Ngcobo that will be staying in the guesthouse for a few nights during May 2019.
6. On 5 March 2019, Greys started with renovations in the guesthouse. Each room was remodeled and Greys borrowed an amount of R 80 000 from ABSA Bank to finance the remodeling.
7. On 25 April 2019, Greys purchased a second-hand oven and refrigerator from a nonvendor for use in the guesthouse’s kitchen The total purchase price of the items was R 15 200 and the market value was R 18 600 The purchase price was fully paid on 25 April 2019.
8. Greys paid an amount of R 6 000 (per month) to Showmax for a monthly TV-subscription (a service provided to the guests), as well as R 9 250 (excluding VAT) to ABSA Bank for bank charges.
REQUIRED:
Calculate the VAT payable by or refundable to Greys Lodge (Pty) Ltd for the two-month tax period ending 30 April 2019
Note: Where an amount is Nil, please indicate and supply a brief reason.
International Business and the New Realities
ISBN: 978-0136090984
2nd Edition
Authors: S. Tamer Cavusgil, Gary Knight, John R. Riesenberger