VAT on mixed baskets: 0% and standard-rated items
How the till taxes a South African basket of 0% and standard-rated goods, the exempt-item limit, and what to check before the VAT period closes.
By Achekam · · 4 min read · For Retail businesses in South Africa
A basket at a South African grocer, pharmacy or spaza-style convenience store often mixes goods that carry VAT at the standard rate with goods that carry it at 0%. The customer sees one total. Behind it, every line has to be taxed correctly, and the VAT return for the period relies on that happening thousands of times without a slip.
When it goes wrong, the till is rarely to blame. The mistake is made once, when a product is set up with the wrong VAT treatment, and then repeated on every sale of that product until someone notices.
At the time of writing, South Africa's standard VAT rate is 15%, in force since 1 April 2018, when it rose from 14%. Rates do change, so confirm the current rate with SARS before relying on any figure here.
The rate belongs to the product, not the basket
Achekam's till taxes each line at its own product's VAT rate. A product set at 0% stays at 0% whatever else is in the basket, and the other products are taxed at South Africa's approved standard rate. There is no basket-level VAT switch to get wrong.
Picture a basket holding a staple your accountant has confirmed is zero-rated, a cooldrink and a packet of batteries. The staple's line carries no VAT. The cooldrink and the batteries each carry standard-rate VAT. The receipt is a PDF made by the server from the posted sale and shows VAT by rate, so the customer, and anyone checking later, can see both rates on one slip.
Product set-up is where it is won or lost
The VAT treatment is chosen when the product is created in the Item Master, under the Accounting menu, along with its SKU, name, category, selling and cost price and opening quantity. The Item Master needs the Point of Sale, Warehousing or Wholesale add-on.
There is currently no screen to change a product's price, cost or VAT treatment once it has been created. That makes the first entry count. Before loading your range:
- Ask your accountant to mark, on your product list, which lines are zero-rated, which are exempt and which are standard-rated.
- Load a handful of products of each kind first.
- Ring up a test basket and read the VAT-by-rate section of the receipt.
- Only then load the rest.
Zero-rated is not exempt, and the till cannot yet tell them apart
Zero-rated and exempt supplies are different things for VAT purposes, and your VAT return treats them differently. SARS's guide to completing the VAT201 return shows where standard-rated, zero-rated and exempt supplies are each declared. Achekam's Item Master offers an Exempt choice, but today the choice between exempt and zero-rated is not saved on the product. A product marked Exempt is therefore recorded at the till, and in the VAT figures read from till sales, as zero-rated.
If any of your products are genuinely exempt, keep a separate list of them. Give it to whoever prepares your VAT return each period, so they can move those sales out of the zero-rated figure. If you are not sure whether something is exempt or zero-rated, that is a question for your accountant, not for the cashier.
Prices on the shelf: with VAT or without
The business decides whether shelf prices include VAT. Shops selling to the public usually show prices that include VAT, so the customer pays what the label says. A business selling mainly to trade buyers may prefer prices before VAT.
Whichever you choose, load selling prices into the Item Master on the same basis, and make sure the labels on the shelf match. A label that shows one thing while the till works on the other basis leads to awkward conversations at the counter.
The listing by rate, and the VAT201
Posted till sales can be listed by VAT rate and tax code for any period. That listing is the till's contribution to your VAT return. Achekam does not prepare, store or submit a VAT201, and nothing is submitted to SARS eFiling, so the return itself is completed and filed by whoever handles your VAT.
Run the listing for the period and set it beside the revenue and output VAT accounts in your ledger. The till's share should be explained by the listing; anything else in those accounts should come from invoices or journals you can name. Refunds are separate documents linked to their sales, as refunds, voids and store credit at the till explains, so look for them too. The accounts the till posts to are set out in what a till sale posts to your books.
Before the VAT period closes
- Run the till listing by VAT rate and tax code for the period.
- Look at the zero-rated total: does it include products that are really exempt?
- Check products created during the period and confirm each one's VAT treatment.
- Compare the listing with the revenue and output VAT accounts in the ledger.
- Hand the listing and your exempt-products list to whoever prepares the VAT201.
- File both with the period's VAT records.
Discounts reduce what is charged on a line, so a period with heavy discounting will show lower VAT on the same volume; setting cashier discount limits covers how to keep those under control.
The cheapest VAT correction is the one made before a product is ever sold. A sitting with your accountant and your product list, before the Item Master is loaded, saves a great deal of unpicking at return time.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
