What is Offset? A vendor calculates their VAT liability, in relation to its allocated tax period, by off-setting an input tax transaction (i.e. VAT that is charged on the acquisition of goods and services and which is allowed as a deduction) against output tax transaction (i.e. VAT that is charged on the supply of goods and services by the vendor) in a specific VAT Type Field of the VAT 201 report. Example: A user created “Capital goods and/or services supplied to you” Tax Invoice to the value of R 1000.00. He later creates a Credit Note on this Tax Invoice to the value of R 300.00. Instead of capturing R 1000.00 on Field 1A –Capital goods and/or services supplied to you Output VAT and capturing R300.00 on Field 14 – Capital goods and/or services supplied to you Input VAT, the user captures the difference (R 700.00) on Field 1A.
What is Non-Offset? A vendor is required to calculate their VAT liability, in relation to its allocated tax period, by off-setting input tax (i.e. VAT that is charged on the acquisition of goods and services and which is allowed as a deduction) against output tax (i.e. VAT that is charged on the supply of goods and services by the vendor). Example: A user created “Capital goods and/or services supplied to you” Tax Invoice to the value of R 1000.00. He later creates a Credit Note on this Tax Invoice to the value of R 300.00. The R 1000.00 is captured on Field 1A –Capital goods and/or services supplied to you Output VAT and R 300.00 on Field 1A –Capital goods and/or services supplied to you Output VAT, thus totalling a VAT Payable total on the VAT 201 report of R 700.00.
Note: Only users with User Permissions to Change Company Settings will be able to capture this information.
To capture this information, follow these simple steps: Click on Company > Change Company Settings > VAT Settings > VAT Settings: 
- Verify or update the Offset Credits on Sales/Purchases in the VAT Details section.
- Click on Save
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