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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29579
Experience:  Taxes, Immigration, Labor Relations
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If i give 10 watches free

Customer Question

If i give 10 watches free as a prize do i raise a tax invoice with vat or do invoice at zero

Submitted: 4 years ago.
Category: Tax
Expert:  Megan C replied 4 years ago.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Please let us know what country you are in.

Thank you!
Customer: replied 4 years ago.

South africa

Expert:  Rachel-Mod replied 4 years ago.

Hello,

I’m a moderator for this topic. It seems the Professional has left this conversation. This happens occasionally, and it's usually because the Professional thinks that someone else might be a better match for your question. I've been working hard to find a new Professional to assist you with your tax question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

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Customer: replied 4 years ago.

hang on i paid to get an answer , please or is this site just another one of those ....

Expert:  Rachel-Mod replied 4 years ago.

Thank you for your patience. We will continue the search for a Professional for you.


Rachel

Expert:  Lev replied 4 years ago.

Hi and welcome to Just Answer!
See VAT ruling #381 - http://www.sars.gov.za/SARSCustom/VAT%20Rulings/VAT%20Rulings%20381%20-%20399.htm

While it is related to the national lottery prizes - the same tax treatment should apply.

Prize winners are not liable to account for output tax in respect of prizes received - unless they are carrying on of an "enterprise" and prizes are payments for services.

The operator of the lottery on other competition is entitled to an input tax deduction equal to the tax fraction of amounts paid out by him as prizes or winnings.

Customer: replied 4 years ago.

Really did not answer my question which was simple , do i raise a tax invoice for the prize and pay the vat or do i send the product out at zero value and show a loss in balance sheet

Expert:  Lev replied 4 years ago.
I think that I address your question exactly as it was asked.
Prize winners are not liable to account for output tax in respect of prizes received - unless they are carrying on of an "enterprise" and prizes are payments for services.
So - depending on your situation - if prize winners are carrying on of an "enterprise" and prizes are payments for services - you do issue a tax invoice for the prize and charge VAT, otherwise - you as an operator is entitled to an input tax deduction equal to the tax fraction of amounts paid out by you as prizes or winnings.
Please be sure to ask for clarification as needed.
Expert:  Lev replied 4 years ago.
The question was asked and answered long time ago.
If you have any additional details or have other tax related issues - please be sure to ask.