BANKING services are among the many sectors that will be affected by the 1% VAT increase that was effective April 1.
This comes amid rising costs for petrol, school fees and a whole range of consumable goods that have been factored into the increasing cost of living.
The Ombudsman for Banking Services, Reana Steyn, said, “Consumers should rework their budgets and remember to include increases in their bank fees due to the VAT increase. This is a good time to assess the services you require for your personal and business banking needs, to shop around and see which bank has the most affordable fees for your needs. You may also check with your bank about which fees can be negotiated.”
The 2018 budget speech announced the 1% increase in Value Added Tax (VAT), from 14% to 15%. Some economists have said the increase could be favourable for economic growth and improving collections for the public purse while Gilad Isaacs, director at the CSID Research Programme at Wits, said it would hit the poor the hardest.
Patrick Emmett, senior tax consultant at Mazars in Port Elizabeth, said it was important to clarify the issue of VAT and dates on which it can apply.
“Where the time of supply occurs prior to April 1, VAT should be accounted for at 14%. Conversely, where the time of supply occurs after April 1, VAT should be accounted for at 15%. The issue that arises though, is how to account for VAT where goods are delivered, or services are rendered before April 1 but the time of supply is after April 1.” Steyn said that the real impact is on consumers.
“A family that makes a bond or rental repayment of R7 500 a month, will now pay an additional R75 a month.” In line with the practice of other financial ombudsman organisations internationally, the OBS do not have jurisdiction over complaints about a bank’s general interest rate policy or schedule of fees.
However, the ombud may intervene in the instance that a bank charges a customer more than the agreed or publicised rate. There are also rates such as the repayment rate for home loans, which although vary from bank to bank, cannot exceed a set legal maximum.
“Banks charge a variety of fees for different types of transactions. It is in your best interests to obtain the bank’s list of charges and calculate the least expensive costs for your banking requirements. Most banks have their fees listed on their website so it’s quite easy to make comparisons,” Steyn says.