- The ruling addresses the VAT treatment of deposits paid by guests and forfeited upon cancellation of bookings at a game reserve.
- Forfeited deposits are considered “consideration” for VAT purposes under section 1(1) of the VAT Act.
- The Applicant (a tourism and hospitality company) must declare and pay output VAT on these forfeited deposits.
- Deposits are initially recorded as liabilities and only recognized as income (and subject to VAT) when applied to accommodation or forfeited.
- If the booking is cancelled and the deposit is forfeited, the Applicant must account for VAT on the forfeited amount.
Source: sars.gov.za
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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