Even if you're a registered VAT vendor, SARS won't let you claim back the VAT on certain expenses. Section 17(2) of the VAT Act specifically denies input VAT on entertainment, club membership fees and subscriptions, and motor cars. You also can't claim input VAT without a valid tax invoice, on goods or services used for exempt supplies, or on private expenses.

1. Entertainment

You can't claim the VAT on entertainment. The VAT Act defines it broadly as providing any food, drinks, accommodation, entertainment, amusement, recreation or hospitality of any kind, directly or indirectly, in connection with your business.

That includes:

  • client lunches and dinners

  • coffee, snacks and refreshments for meetings and staff

  • year-end functions and team-building

  • gifts of food and drink

  • tickets to sporting or music events for clients

Main exceptions: you can claim input VAT on entertainment if:

  • you're in the entertainment business, for example a restaurant, hotel or caterer buying food and drinks to supply to paying customers,

  • an employee has to sleep away from home and their usual place of work because of their duties: their meals, refreshments and accommodation are claimable, or

  • you recover the full cost of the entertainment from the person who receives it, charging them VAT.

Income tax is different. Client entertainment can still be deductible for income tax if it's genuinely for the business. You just can't claim the VAT. See tax-deductible business expenses.

2. Club membership fees and subscriptions

You can't claim the VAT on membership fees or subscriptions to sports, social or recreational clubs, such as golf clubs, gyms and social clubs, even if you use them to network with clients.

Professional body subscriptions and business software subscriptions aren't affected by this rule.

3. Motor cars

You can't claim the VAT when you buy or lease a "motor car". For VAT purposes, a motor car is any vehicle built or converted wholly or mainly to carry passengers. It includes:

  • sedans, hatchbacks, coupés and SUVs

  • station wagons

  • double-cab bakkies

  • minibuses

Not motor cars (so the VAT can be claimed if they're used for your business):

  • single-cab bakkies and panel vans designed to carry goods

  • vehicles with an unladen mass of 3,500 kg or more

  • vehicles that seat only one person, or more than 16

  • ambulances, hearses, caravans and special-purpose vehicles

  • qualifying game-viewing vehicles

Still claimable on a motor car: VAT on repairs, maintenance and insurance for vehicles used in your business. Fuel is zero-rated, so there's no VAT on it to claim in the first place.

Exception: motor dealers and car-hire businesses can claim the VAT on cars they buy to sell or rent out.

4. No valid tax invoice

Without a valid tax invoice, SARS will disallow the claim on audit, even if the expense is genuine.

  • Over R5,000: you need a full tax invoice showing your business's name, address and VAT number.

  • R5,000 or less: an abridged tax invoice is acceptable.

  • R50 or less: no tax invoice is required, but keep the till slip.

The supplier must be VAT-registered. A 10-digit VAT number starting with 4 is the format to look for. Check unfamiliar ones with our VAT number format check.

5. Exempt supplies and private use

You can only claim input VAT on costs used to make taxable supplies. If an expense relates to exempt supplies, such as residential rental income or certain financial services, the VAT on it can't be claimed. Costs used partly for taxable and partly for exempt supplies must be apportioned. See zero-rated vs exempt VAT.

Private expenses paid through the business, such as personal groceries or a family holiday, are never claimable.

What if you claimed it by mistake?

If you've claimed VAT you weren't entitled to, correct it before SARS finds it. That limits penalties and interest. See how to fix a mistake on a VAT return.

Frequently asked questions

Can I claim VAT on client lunches? No. Entertainment, including meals and drinks for clients, is denied input VAT unless you're in the entertainment business or recover the cost from the client.

Can I claim the VAT on a double-cab bakkie? No. A double-cab bakkie counts as a motor car for VAT, so the VAT on buying it can't be claimed. VAT on repairs and maintenance for business use can be.

Can I claim VAT on fuel? There's no VAT to claim. Fuel is zero-rated.

Can I claim VAT on staff accommodation when they travel? Yes, if the employee has to spend the night away from both their home and their usual workplace because of their work.

What's the minimum for a full tax invoice? You need a full tax invoice when the amount is more than R5,000. For R5,000 or less, an abridged tax invoice is enough.