VAT - Relocation Costs

VAT – Relocation Costs



By Nikki Viljoen – Viljoen Consulting CC September 2009.

The economic downturn has forced and even been the excuse of, many businesses downscaling, by finding cheaper premises or even relocating to another town or city.

In instances where the relocation is to another location in the same town and/or city, it is usually not necessary for the employer to pay for relocation costs for the staff. In the instances where the relocation is to another city or town however, it is the norm for employers to pay a percentage of the costs (it’s a good idea to have a relocation policy in place before you start the process though).

This would also apply in the instances where, say a branch was being opened in another city or town and staff were being relocated and/or transferred in order to meet the staffing requirements at the new branch or indeed, if an employee was being relocated as part of a promotion. In fact it would apply in any and all instances where it was the Company’s requirement that the employee relocate.

The question is, whether the VAT charged or paid to the removal company can be claimed and the answer is ‘Yes it can’.

The relocation of a staff member to another branch of the company or to another location because that is where the company is going to be operating from, is a cost that raised in the ‘course of enterprise’ which means it is an operating cost. Therefore the input VAT can be claimed on all relocation costs.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za