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n IMFO : Official Journal of the Institute of Municipal Finance Officers - Unallocated Income & Vat consequences
There has been a lot of confusion when payments are received but simply cannot be allocated to an income stream of a municipality because of various factors such as wrong or no reference numbers, no bank reconciliations etc.
It has been noted that there is confusion as to what the VAT treatment of this income should be. Many municipalities simply rectify it on an annual basis or do not rectify or declare any VAT on this income at all.
Municipalities have often referred to section 8(27) of the VAT act to account for the VAT on additional income, which has led to confusion regarding the application of Section 8(27)of the VAT Act.
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