You can claim input VAT on an expense if three things are true: the goods or services were acquired for the purpose of making taxable supplies, you hold a valid tax invoice or other prescribed documentary proof, and the supply is not one on which the VAT Act specifically denies a deduction. Fail any one of the three and the claim goes, no matter how obviously business-related the expense was.
Most South African vendors under-claim. Not because they are cautious, but because nobody ever set out the test clearly, so expenses get processed as "probably not claimable" and 15% of real money quietly stays with SARS. This guide sets out what qualifies, what does not, and where the grey areas actually sit.
TL;DR
The test: acquired for making taxable supplies + valid documentary proof + not a denied supply.
Input tax must be claimed within five years of becoming entitled to it.
Zero-rated purchases carry no VAT — there is nothing to claim on fuel, most basic foodstuffs or exports.
Exempt purchases carry no VAT either — bank interest, residential rent.
Mixed business and private use means claiming only the business portion.
If you claimed input VAT and did not pay the supplier within 12 months, you must account for output tax on it.
Entertainment, motor cars and certain club subscriptions are denied outright.
The three-part test
Part 1: Was it acquired for making taxable supplies?
This is the purpose test, and it is the one that matters most.
Input tax is deductible where the VAT was incurred for the purpose of consumption, use or supply in the course of making taxable supplies. Taxable supplies means your standard-rated and zero-rated sales.
Three consequences follow:
Expenses relating to exempt supplies are not claimable. A landlord letting residential property is making exempt supplies, so the VAT on maintenance, agent's commission and rates on that property cannot be claimed.
Private expenses are not claimable. The test is business purpose, not whose name is on the invoice.
Mixed-use expenses must be apportioned. More on that below.
Note that the purpose test does not require the expense to be deductible for income tax. The two systems ask different questions. Capital equipment is not deductible for income tax in the year of purchase, but the input VAT on it is claimable in full in the period of acquisition.
Part 2: Do you hold the documentary proof?
For most expenses that means a valid tax invoice. As SARS puts it plainly: without a proper tax invoice a business cannot deduct input tax. The full requirements are set out in what makes a valid tax invoice in South Africa.
The prescribed proof varies by transaction type:
| What you bought | What you need |
|---|---|
| Ordinary goods or services over R5,000 | Full tax invoice |
| Ordinary goods or services R5,000 or less | Abridged tax invoice, including a compliant till slip |
| Purchases of R50 or less | Till slip or sales docket showing the VAT |
| Imported goods | Customs documentation — the bill of entry and proof the import VAT was paid |
| Second-hand goods from a non-vendor | A completed VAT264 declaration |
| Imported services | A VAT215 record |
The requirement is absolute. Genuine expense, paid from the business account, obviously for business — none of it substitutes for the document.
Part 3: Is it on the denied list?
Certain supplies are denied by the VAT Act regardless of business purpose. The main ones are entertainment, motor cars, and fees or subscriptions to clubs, associations or societies of a sporting, social or recreational nature.
We cover the denied list and its exceptions in detail in the expenses you can never claim VAT on.
What you can normally claim
For a typical South African SME making standard-rated supplies, input VAT is claimable on:
Premises and occupancy
Commercial rent (residential is exempt, so no VAT to claim)
Municipal electricity and water charged with VAT
Security, cleaning, office maintenance and repairs
Commercial property rates where charged with VAT
Staff and operations costs
Stationery, printing and consumables
Uniforms and protective clothing
Recruitment agency fees
Staff training courses from a VAT-registered provider
Professional and financial services
Accounting, bookkeeping and audit fees
Legal fees relating to the enterprise
Consulting and advisory fees
Bank charges (the fees carry VAT; interest is exempt and carries none)
Insurance premiums on short-term business insurance
Technology and communications
Software subscriptions and licences
Website hosting and development
Business telephone, mobile and internet — on the business-use portion
Computers, laptops, servers and peripherals
Sales and marketing
Advertising and media spend
Design, branding and print
Trade show and exhibition costs
Commission paid to VAT-registered agents
Stock and capital equipment
Trading stock and raw materials
Plant, machinery, tools and equipment
Office furniture and fittings
Commercial vehicles that fall outside the "motor car" definition — bakkies, panel vans, trucks
Transport and travel
Air travel, car hire and tolls for business travel
Accommodation — with specific rules that make this a partial exception to the entertainment denial
Courier and freight charges
Things people wrongly think carry VAT
A large share of "missing" input VAT was never there in the first place. There is no VAT to claim on:
| Expense | Why |
|---|---|
| Petrol and diesel | Zero-rated. There is no VAT on the fuel itself, so nothing to claim. Oil, servicing, tyres and repairs do carry VAT. |
| Bank interest and finance charges | Financial services are exempt. Bank fees do carry VAT — split the two on your statement. |
| Salaries and wages | Not a supply for VAT purposes. |
| Residential rent | Exempt. |
| Most basic foodstuffs | Zero-rated — brown bread, maize meal, rice, milk, eggs, fruit and vegetables and others. |
| Purchases from non-vendors | If your supplier is not registered, they charged no VAT and you can claim none. Check the SARS VAT Vendor Search if unsure. |
| Payments to foreign suppliers | No SA VAT is charged. Imported services may instead attract VAT payable by you, which is a different mechanism. |
| Insurance payouts and pure donations | Not consideration for a taxable supply. |
Working through this list is usually the fastest way to reconcile "why is my input VAT so much lower than 15% of my expenses".
Apportionment: when an expense serves two purposes
Where goods or services are acquired partly for making taxable supplies and partly for another purpose — exempt supplies or private use — you may only claim the portion relating to the taxable use.
Private use. A cellphone contract used 70% for business supports a claim on 70% of the input VAT. You need a reasonable, documented basis for the split, applied consistently — not a number invented at year-end.
Home office. Where a portion of a home is used for the enterprise, apportionment is usually on floor area. Note that the VAT position and the income tax home office deduction are separate tests with separate requirements.
Mixed taxable and exempt supplies. A business making both taxable and exempt supplies — a property company with both commercial and residential lettings, for example — must apportion overheads that cannot be attributed to one or the other. The default method is turnover-based. Using an alternative method requires SARS approval, and SARS has issued Binding General Rulings on apportionment that are worth reviewing if this is material to your business.
The de minimis rule. Where taxable use is at least 95%, the input tax may generally be claimed in full without apportionment. That saves a great deal of arithmetic for businesses with a small incidental exempt income stream.
The five-year rule
Input tax must be deducted within five years from the date you became entitled to it.
This is more useful than it sounds. If you discover an invoice from eighteen months ago that was never processed, the input VAT is not lost — it can generally still be claimed, provided you hold the documentary proof.
Two important limits:
If you are deregistering, deductions not previously made can be claimed in the final VAT return, but no deductions may be made after that return is submitted. Sweep your records thoroughly before you file it.
The same five-year window applies to claiming a refund on a return, measured from the date the return was due.
The 12-month rule that creates a liability
This one catches businesses with stretched creditors.
If you deducted input tax on a supply but have not paid your supplier within 12 months, you must account for output tax on that amount — effectively reversing the claim until you pay.
Practical implications:
Run an aged creditors report before every VAT return, not just at year-end. Anything approaching twelve months old that you claimed VAT on needs adjusting.
When you eventually pay, you can claim the input tax again.
On deregistration, any input tax claimed on unpaid supplies over 12 months old must be accounted for, unless you already made the adjustment.
Businesses in cash flow difficulty frequently have this exposure sitting unrecognised in their books, which turns a bad month into a bad assessment.
Notional input tax on second-hand goods
This is the claim most businesses do not know exists, and for some it is worth a great deal.
Where you acquire second-hand goods from a person who is not a VAT vendor — so no VAT was charged to you at all — you may still be entitled to deduct a notional input tax, provided the goods are acquired for making taxable supplies.
The logic is that the goods have already borne VAT once, somewhere back up the chain, and the system should not tax the same value twice.
Who this matters to:
Second-hand car and equipment dealers buying trade-ins from private individuals
Antique, furniture and clothing resellers
Scrap metal and recycling businesses
Property businesses acquiring fixed property from non-vendors
Any business buying used plant or equipment privately
The conditions are strict:
The goods must be second-hand goods as defined
The supplier must be a South African resident and the supply must be in South Africa
The goods must be acquired for making taxable supplies
You must hold a completed VAT264 declaration — the SARS form for the supply of second-hand goods, which SARS modernised in 2023
Special rules apply to fixed property and to connected-person transactions
The VAT264 is the whole thing. No declaration, no claim. Build it into the buying process — get it signed at the point of purchase, not chased afterwards, because a private seller who has taken their money and left is very hard to bring back.
Imports and imported services
Two mechanisms that behave differently from ordinary domestic purchases.
Imported goods
VAT is payable on the importation of goods, calculated on the customs value plus duty plus a prescribed uplift, rather than simply on what you paid the foreign supplier.
That import VAT is claimable as input tax where the goods are for making taxable supplies — but the documentary proof is the customs documentation, principally the bill of entry, together with proof that the VAT was actually paid. A commercial invoice from the foreign supplier is not sufficient on its own.
Where a clearing agent pays the import VAT on your behalf, make sure you obtain the underlying customs documents and not just the agent's own invoice. This is a routine cause of disallowed claims.
Bills of entry for goods imported or exported must be retained for five years, alongside your other VAT records.
Imported services
Where you acquire services from a foreign supplier and use them for non-taxable purposes, VAT may be payable by you on those imported services — a reverse-charge style mechanism, recorded on a VAT215.
The point that surprises people: where the services are acquired wholly for making taxable supplies, imported services VAT generally does not apply. So an ordinary business buying foreign software for use in its taxable enterprise is usually outside this. A business making exempt supplies is not.
Separately, foreign suppliers of electronic services to South African customers operate under their own registration regime, which is why some foreign software invoices carry South African VAT and a South African VAT number. Where they do, that is ordinary input tax and claimable in the normal way, subject to holding a valid tax invoice.
Claiming VAT on expenses incurred before registration
The VAT Act allows input tax in limited circumstances on goods and services acquired before you became a vendor, where they are still held and used for making taxable supplies at the date of registration.
The rules are specific and the documentary requirements strict. Two points to be realistic about:
It is far more likely to apply to goods still on hand — stock and equipment — than to services already consumed.
A large pre-registration claim is close to a guaranteed SARS verification.
Have this reviewed rather than claimed on assumption. The saving is real, but so is the scrutiny.
Documenting claims so they survive a verification
SARS verifies input VAT claims routinely, and almost always where a refund is claimed. Vendors who come through cleanly tend to have the same four things.
1. Invoices filed against the transaction, not in a folder. Most modern accounting systems allow the source document to be attached to the ledger entry. Where that is the case, producing a verification pack is a filter and an export rather than a week of searching.
2. An input VAT listing that reconciles to field 19 of the VAT201. SARS will ask for the schedule supporting the claim. If it does not tie to the return, the conversation starts badly.
3. Invoices checked at the point of receipt. Defects are cheap to fix on the day the invoice arrives, and expensive to fix eighteen months later inside a 21-business-day verification window.
4. A documented apportionment basis. Where you claim a percentage — cellphone, vehicle, home office — write down the method and keep it consistent. An unexplained percentage looks arbitrary; a documented method looks like a policy.
Frequently asked questions
What can I claim input VAT on in South Africa? On goods and services acquired for the purpose of making taxable supplies, where you hold a valid tax invoice or other prescribed proof, and the supply is not specifically denied. That covers most ordinary business costs — rent, professional fees, stock, equipment, software, advertising and commercial vehicles.
Can I claim VAT on fuel? No. Petrol and diesel are zero-rated, so no VAT is charged and there is nothing to claim. Vehicle servicing, repairs, tyres and oil do carry VAT and are claimable, subject to the motor car rules.
Can I claim VAT on bank charges? Yes, on the fees. Bank charges carry VAT and are claimable where they relate to the enterprise. Interest is an exempt financial service and carries no VAT. Split the two rather than claiming on the total.
How far back can I claim input VAT? Five years from the date you became entitled to the deduction. If you are deregistering, all outstanding deductions must be claimed in the final VAT return, as nothing can be claimed after it is submitted.
Can I claim VAT on something I bought before registering? In limited circumstances, where the goods or services are still held and used for making taxable supplies at registration. The conditions and documentary requirements are strict, and a large pre-registration claim will attract a verification. Have it reviewed first.
What if I claimed input VAT but never paid the supplier? If the supplier remains unpaid after 12 months, you must account for output tax on the amount, effectively reversing the claim. You can claim it again once you pay.
Do I need a tax invoice for every claim? For supplies over R50, yes — a full tax invoice above R5,000, an abridged one at or below R5,000. Below R50 a till slip or sales docket showing the VAT is sufficient. Imports, second-hand goods from non-vendors and imported services each have their own prescribed documentation.
Can I claim VAT on staff entertainment or client lunches? Generally no. Entertainment is specifically denied under the VAT Act, with narrow exceptions. See the expenses you can never claim VAT on.
The money most businesses leave behind
In our experience, the average small vendor under-claims input VAT — not on anything exotic, but on the same handful of items every period: bank charges buried in an interest line, the business portion of phone and internet, software subscriptions paid on a personal card, and equipment bought before someone remembered to ask for a tax invoice.
Smartbook processes and reviews every expense monthly, checks invoices against the SARS requirements as they come in, and applies a documented apportionment basis for mixed-use costs — so the claim is both complete and defensible.
See our monthly accounting plans →
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Apportionment methodology and pre-registration claims are fact-specific; take advice on your own circumstances rather than relying on general guidance.
Primary sources: SARS — Value-Added Tax · SARS — Obligations of a VAT vendor · SARS — Tax Invoices · SARS — VAT404 Guide for Vendors · SARS — VAT264 second-hand goods declaration