A strange question about VAT.

[insulin]

A strange question about VAT.

Please excuse my novice knowledge about the VAT system. I spend most of my life as a cheap labourer my income per month never exceeded R3000 ever! Now I know you think bla-bla Loser! bla-bla. But the point is if I am to urn more money but is only working as a freelance contractor How will the Vat system work. How much Vat must I pay? The truth is I don’t have a clue....
Thanks

[Dave A]

How close are you to doing a turnover of R1 million per year? Most often you really don't have to worry about VAT until then.

[insulin]

A million is fictional to me.

Then I don’t have to worry about Vat for a long-long time. A million is fictional to me. I have a better change to be abducted by aliens then to see a million Rand check! But yes my question is not without reason; see my boss takes about R450 from my income to bay for Tax the unemployment fund. Then there is my office phone bill of a R150. But works is work...

[wynn]

The only reason you would want to register for VAT is if your clients require that you supply them with VAT invoices.
Otherwise if you just want to trade, you don't have to be registered, unless you exceed the magic annual turnover.

[duncan drennan]

But yes my question is not without reason; see my boss takes about R450 from my income to bay for Tax the unemployment fund. Then there is my office phone bill of a R150. But works is work...

I'm a little confused exactly what you are paying tax for. UIF is 1% of gross salary (and your employer contributes another 1%). The tax threshold for the 2008 tax year was R3833/month....but it depends on what benefits you receive.

[taxlibrary]

It is unlikely that you ever have to worry about VAT.

But remember that as an independent contractor you can deduct many expenses that are necessary for you to earn your income, for example stationery, phone bill, travelling from the office to clients, books, newspapers and magazines that are work related, membership fees of professional societies, etc.

http://www.taxlibrary.co.za

[insulin]

No benefits at all actually...

In all honesty I think that skilled labour a system devised to intimidate the so-called unqualified worker to work for much less. Funny that! Because I can recall a lot of wealthy businesses that only use unqualified workers because like myself I cannot say no to any income.

The thing is I spend a lot of my own money on training in a completely new direction but now the second default system comes into play. Now it comes down to experience. Needless to say it is a NEW direction and I don’t have any experience now no one wants to give you the change to get that experience because they know they can no longer use you as unqualified labour. And yes you cannot get the job if you don’t have the qualifications! Talk about a self-defeating system!

Yet again the job what I have now I have all the experience in the world but it is simply impossible for me to train myself it is just too expensive. So I found out that we are working for a bunch of losers... Feeding from the poor so that they can indulge in life.

This brings me back to my question: If I am a sub-contractor do I register for tax? Or do I register my own small business and just pay in voluntary Tax? I really don’t know. All I do know is that Tax can and is designed to cripple you if you don’t pay...

[taxlibrary]

You have to decide whether you are going to study the basic tax laws yourself to do your own tax or whether you are going to pay someone else to give you that advice and help with planning. Some pointers:

First, if you work mostly for only one client they will have to deduct PAYE from your fees. The issue about registering as a business versus and individual then does not arise.

If you are going to do your tax yourself I suggest that you estimate how much you will earn in the 2009 and 2010 financial years and then calculate the tax payable by a small business versus that payable by an individual on that income and see which is less.