Gym Equipment (Pty) Ltd (GEPL) sells gym equipment. It is a registered value added tax (VAT) vendor
Question:
Gym Equipment (Pty) Ltd (GEPL) sells gym equipment. It is a registered value added tax (VAT) vendor and e-files its VAT returns. The following information is relevant for the VAT period ended 30 November 2019. All amounts are stated inclusive of VAT where applicable.
(i) Gym equipment sales amounted to R8,000,000. However, two treadmills were returned by a gym due to faulty screens. These treadmills had been sold by GEPL for R16,000 in total. GEPL issued the necessary credit notes.
(ii) Joe’s Gym purchased new weight equipment on credit for R70,000 in October 2018. Despite every effort by GEPL to collect the amount owing from Joe’s Gym, no payment was received. Legal costs of R10,000 were incurred by GEPL to try to recover this debt.
(iii) GEPL imported inventory from the United States. The inventory cost R300,000 which was also accepted as the customs value.
(iv) GEPL acquired some second-hand equipment. Equipment worth R100,000 was acquired as part of the purchase by GEPL of a gym business as a going concern (the equipment being considered the substantive assets of the business). Other second-hand gym equipment at a cost of R150,000 was acquired from non-VAT vendors and a further R150,000 of second-hand equipment was acquired from VAT vendors.
(v) A motor car was purchased for the managing director at a cost of R350,000 and a flatbed truck was purchased for deliveries at a cost of R550,000. (vi) Salaries and wages paid amounted to R1,450,000.
(vii) Office rental paid for November and December amounted to R200,000 in total.
Required:
(a) Calculate the VAT payable by Gym Equipment (Pty) Ltd for November 2019. Note: You should format your answers in two columns labelled ‘Input VAT’ and ‘Output VAT’ and indicate by the use of a zero (0) any amounts for which VAT is not chargeable or not reclaimable.
(b) State the date(s) for submission of the November 2019 VAT return and payment of the VAT due. Explain the consequences of late payment and late submission of the November 2019 VAT return.
