ITC JANUARY 2022 SOLUTION PAPER 4 QUESTION 2 4 © SAICA 2022

Part (d) Discuss whether Barista applied the correct VAT treatment for the acquisition of the new manufacturing machine for the two-month tax period ended on 31 December 2021.

ANSWER

Barista's VAT treatment was incorrect.

They claimed the VAT in December 2021, but they couldn't legally do so because:

• The invoice was received in January 2022.

• The time of supply was in January 2022.

Therefore, the VAT should have been claimed in the next tax period, which ended in February 2022.