SAICA Updates Notional Input VAT Guide (Version 3)

Posted 21 January 2026 Written by Acts Online
Category Tax

Brought to you by SA Accounting Academy: The South African Institute of Chartered Accountants (SAICA) has updated its technical guidance regarding the entitlement to and calculation of notional input tax deductions.

In terms of paragraph (b) of the definition of ‘input tax’ in section 1 of the Value-Added Tax Act, No. 89 of 1991 (the VAT Act), vendors may be entitled to a deduction of notional input tax when acquiring second-hand goods from a resident of the Republic who is not a vendor. The Notional Input VAT Guide (Version 3) provides an updated overview of the statutory requirements for these deductions, the calculation of the tax amount, and the specific timing of when such deductions may be claimed.

The Guide clarifies the application of the tax fraction to the consideration paid for second-hand goods and emphasizes the necessity of meeting the definition of ‘second-hand goods’ as stipulated in the Act. Key areas of focus in the updated version include:

  • The criteria for qualifying as ‘second-hand goods’ under section 1 of the Value-Added Tax Act, No. 89 of 1991;
  • The calculation of the notional input tax deduction based on the lesser of the consideration paid or the open market value;
  • The timing of the deduction, which is generally limited to the extent that payment for the goods has been made; and
  • Compliance with the specific documentary requirements set out in section 20(8) of the VAT Act.

Consequential Matters and Specific Acquisitions

The Guide further outlines consequential matters that must be considered in specific second-hand goods acquisitions, such as the impact of subsequent exports or changes in the use of the goods. It serves as a compliance framework for auditors, independent reviewers, and accountants to ensure that notional input tax claims are supported by the requisite evidence to withstand South African Revenue Service (SARS) audits.

Click here to download the Notional Input VAT Guide 2025.

What this means for you, your business, or your clients

  • For yourself: Ensure your technical understanding of section 1 and section 20(8) of the Value-Added Tax Act, No. 89 of 1991 is aligned with Version 3 of the Guide to provide accurate compliance advice on second-hand goods transactions.
  • For your business: Update internal tax compliance and accounting workflows to ensure that notional input tax is only claimed to the extent that payment has been processed, as required by the timing rules outlined in the VAT Act.
  • For your clients: Advise clients who trade in second-hand goods to implement rigorous record-keeping practices that capture the seller’s name, address, and identity number to satisfy the mandatory documentary requirements of section 20(8).

Originally published at https://accountingacademy.co.za/news/read/saica-notional-input-vat-guide

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