Do your invoices meet SARS tax invoice requirements?

All new businesses have an ever expanding amount of information they need to find out about which generally results in a lot of time expended researching regulation. All of this research takes them away from time spent making sales which is ultimately important for a small business start-up to survive. I have done a substantial amount of research myself to understand the requirements so I hope these short blogs will help relieve some business owners of extensive hours of research so they can focus on what matters in their business.

This week I wanted to highlight the tax invoice information that is required by SARS. SARS requires invoices to meet certain requirements in order for them to be considered valid for use by a business to be able to deduct input tax on business expenses.

This means that the purchase invoices you receive from your suppliers should meet these requirements so you can deduct input tax on your business expenses, and the sales invoices you send to your customers should meet these requirements so your customers are able to deduct the input tax on their business expenses.

SARS has an abundance of information on their website which is extremely useful. If you click the image above it will take you to the SARS information page on tax invoice requirements where a useful checklist can be downloaded. It is well worth it for a small business owner to spend 15 minutes reviewing the checklist to ensure they understand and comply with the requirements.

The rule is:

When the consideration for the supply is more than R5,000 a full tax invoice must be issued.

When the consideration for the supply is R5,000 or less, an abridged tax invoice may be issued.

When the consideration for the supply is R50 or less, a tax invoice is not required, however a till slip or sales docket will be required.

The requirements for a valid tax invoice as specified by SARS on their website is:

  • Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”;

  • Name, address and VAT registration number of the supplier;

  • Name, address and where the recipient is a vendor, the recipient’s VAT registration number; 

  • Serial number and date of issue of invoice; 

  • Accurate description of goods and /or services (indicating where applicable that the goods are second hand goods);

  • Quantity or volume of goods or services supplied; 

  • Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax). 

Click on the image above to go to the SARS website and download the checklist. Ensure your invoices you send to customers meet these requirements and then give the checklist to your accounts payable team so they can use it to check the purchase invoices you receive from suppliers.