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VAT – New Dwelling House Claim

VAT on New Dwelling House Claim
The VAT on NDH is a tax incentive covered under Section 70 of the Value Added Tax Act 1991.
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Did You Know?
You can claim back the VAT paid in acquiring a New Dwelling House. The VAT on New Dwelling House Refund Scheme was introduced to encourage Fiji citizens to own homes.
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1. What is VAT on NDH claims?
It is a tax incentive that allows an individual to claim back all VAT paid for the purchase or construction of a new dwelling house.

2. Who is eligible for the VAT on NDH?
A Fiji citizen who had paid VAT in acquiring the new dwelling house or an approved Non-Profit body in Fiji.

3. What is the effective date of this incentive?
1st January 2012.

4. What is the maximum VIP amount allowable for the claim?
FJD$120,000

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Conditions to be Eligible for a VAT Refund

1. What are the conditions that needs to be met by an eligible individual?

a. the person claiming must be a Fiji Citizen;
b. the NDH must be the person(s) first home (i.e. either constructed or purchased);
c. the person making a VAT refund claim should have paid VAT (i.e. either on purchase of NDH from a VAT registered person or purchase of land from a VAT registered person and/or purchase of building materials) upon acquiring the NDH;
d. the person making a VAT claim must have valid tax invoices;
e. the claim must be made within 3 years from the date of acquiring the NDH; and
f. the NDH should have been acquired from 1 January 2012 or following years.

2. What are the conditions that needs to be met by an eligible non-individual?

a. the non-individual must be a non-profit body;
b. the non-profit body must be approved by the CEO;
c. the non-profit body must be involved in the provision of free housing for the underprivileged in Fiji;
d. the non-profit body making a VAT refund claim should have paid VAT on purchase of building materials; and
e. the non-profit body must have valid tax invoices.

The above conditions must be met to be eligible for a VAT claim.
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Acquiring the New Dwelling House

1. What are the two categories for Acquiring the NDH?

i. Purchased NDH from a VAT registered person
ii. Newly Constructed NDH

2. How is VAT payable by the eligible person when acquiring a NDH?

i. Purchasing of NDH

The eligible person must purchase a new dwelling house from a VAT registered person and should have paid VAT to qualify for a VAT refund under this incentive. A VAT Inclusive Price (VIP) must also be clearly stated in the sale and purchase agreement and the tax invoice that will be issued by the seller upon settlement.

ii. Newly Constructed NDH

a. Houses self-constructed

This category relates to houses that have been self-built by the eligible person. The purchase of both land and building materials used for construction of a NDH can be claimed as long as VAT was paid and a tax invoice was issued by the suppliers.

b. Houses constructed through engagement of Contractors

This category involves VAT registered contractors (i.e. construction businesses) who are engaged to build an eligible persons new dwelling house. An eligible person will be required to pay the VAT Inclusive Price (VAT) as charged by the contractor and this must be clearly displayed on a tax invoice.
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Making a VAT Claim

1. How does an eligible person make an application for VAT claim on NDH?

An eligible person must first sign up on the Taxpayer Online Service (TPOS) portal to access the VAT Refund Request for NDH. The VAT claim must be made on TPOS by the eligible person and must provide all documents required for this purpose. You can access the user guide on the link: https://www.frcs.org.fj/wp-content/uploads/2021/09/FINAL-TPOS-FRCS_VAT-Refund-Request-for-NDHF_User_Manual-External.pdf to submit a VAT claim on TPOS.

2. How many times can an eligible person make an application for a VAT claim?
An eligible person can only make an application once after a NDH has been purchased or completion of the newly built home.

3. What are the requirements for a NDH application?

New Dwelling House Category

Required Documents

Purchased NDH

• Evidence of Source of Funds
• Photos of House
• Sale & Purchase Agreement of NDH
• Sellers TIN Letter
• Completion Certificate (certified true copy)
• Certified copy of Title
Constructed NDH in the urban /sub-urban area • Evidence of Source of Funds
• Photos of House
• Contract Agreement (certified copy) if built by a Contractor or Indicate if Self constructed
• Original Tax Invoices (for purchase of building materials)
• Signed Input Schedule
• Completion Certificate (certified true copy)
• Certified copy of Title
• Sale & Purchase Agreement of Land
Houses Constructed on Mataqali Land (Rural) • Evidence of Source of Funds
• Photos of House
• Letters (certified true copy) from:
     • NLTB
     • Turaga ni Koro
     • Roko Tui
     • Turaga Ni Yavusa or Mataqali
• Tax Invoices (for purchase of building materials)

 

4. What is the required time to claim a VAT refund?

a) Purchased Homes
For those who purchase a house from a VAT registered person, a request for a New Dwelling House VAT refund must be submitted with the tax invoice (issued by the seller) and other supporting documents within 3 years of purchase.

b) Self-Built Homes

For those who build their own homes, a request for a New Dwelling House VAT refund must be submitted with the tax invoices (issued by suppliers of building materials) and other supporting documents within 3 years from the date of completion.

5. Can the Eligible person also claim for VAT paid on acquiring the Land?

Yes, the eligible person can also claim for VAT paid on acquiring the land. However, the VAT claim on land will only be allowed if there is a NDH constructed on the land.

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Keeping Proper Records
1. Tax Invoices

The claimant must keep valid tax invoices for the purpose of the NDH claim. Tax Invoices are the source documents for the VAT claim. Therefore, it is important that the eligible person keeps and submits all tax invoices upon requesting for a VAT refund. Without valid tax invoices, the VAT refund may not be claimable.
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VAT Calculation on NDH Claim
1. How much Refund can be claimed?

An eligible person can claim a refund for the amount of VAT paid for acquiring the new dwelling home or VAT paid for building materials and services but only up to a maximum VAT inclusive price of $120,000.
• if an eligible person acquired/built a New Dwelling House costing less than $120,000, all VAT paid may be refunded;
• if an eligible person acquired/built a New Dwelling House costing $120,000 or more, the maximum refund allowable is:

2. How do you calculate the maximum VAT claimable?

The maximum VAT claimable is calculated by using the Tax Fraction below.

Maximum VIP Amount

Calculate VAT Claimable

Maximum VAT Claimable

FJ$120,000

VAT Claimable    = $120,000 x 3/23

                                = $15652.17                     

$15652.17

FJ$120,000

VAT Claimable    = $120,000 x 9/109

                                = $9908.25                     

$9908.25

§  $15,652.17 ($120,000 x 3/23) for supplies made up to 31 December 2015

§  $9,908.25 ($120,000 x 9/109) for supplies made from 1 January 2016 onwards

 

3. Examples of How much Refund can be claimed

Example 1 – New Dwelling House acquired after 31/12/15

In May 2016, Mr. X buys a house for $163,500 from a VAT registered person. The tax invoice shows

• VAT Exclusive Price – $150,000
• VAT (9%) – $13,500
• VAT Inclusive Price – $163,500

Calculation of VAT Refund
The refund due to Mr. X is the lesser of:

i. the amount of the tax fraction on $120,000 = $9908.25 ($120,000 x 9/109), and
ii. the amount paid for the supply = $13,500
iii. VAT Refund due to Mr. X is $9,908.25

 

Example 2 – New Dwelling House acquired before 01/01/16

Mrs. L buys a house for $138,690 in December 2015 from a registered person. The tax invoice shows:

• VAT Exclusive Price – $120,600
• VAT (15%) – $18,090
• VAT Inclusive Price $138,690

Calculation of VAT Refund
The refund due to Mrs. L is the lesser of:

i. the amount of the tax fraction on $120,000 = $15,562.17 ($120,000 x 3/23), and
ii. the amount paid for the supply = $18,090
iii. VAT Refund due to Mrs. L is $15,562.17

Example 3 – Acquisition involving expenses spanning two periods (2016 and 2013- 2015)
Where a claim spans two periods, the amount actually paid (based on tax invoices) will be used to determine the amount of VAT to be refunded.
Mr. F builds a house in October 2015 which is completed in February 2016 for a total cost of $140,000. To assess his refund claim, valid tax invoices for each period up to a total of $120,000 will be included in the determination of the amount of VAT paid.

• Valid tax invoices for January and February 2016 = $30,000
• Valid tax invoices for October – December 2015 = $100,000
• Total – $130,000

Calculation of VAT Refund
The New Dwelling House VAT refund due to Mr. F is the amount paid on the value of the supply up to $120,000. Therefore, full VAT claim will be allowed for 2015 and only $20,000 of $30,000 supplies on which VAT was paid will be allowed for 2016.

i. 2016 – $20,000 x 9/109 = $1,651.38
ii. 2015 – $100,000 x 3/23 = $13,043.48
iii. Total VAT Refund due to Mr. F is $14,694.86

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Site Inspection
A site inspection will be carried out by FRCS officers before the application is finally processed. In the case of the new dwelling house built in an outlying island or remote area, a government officer (e.g. Police, Health or Education Officer) will be required to assist FRCS in this regard.

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FRCS Assistance
1. Visits by Tax Officers
From time to time you’ll be visited at your principal place of business by a tax official. The tax officer will examine your business records, methods, premises etc. and provide guidance where necessary.

2. Tax Education
A taxpayer can seek assistance from FRCS through awareness or training requests. This is a free of charge service and can be accessed by all taxpayers.

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Disclaimer:
The information above is general in nature and does not constitute specific tax advice to any person. To the extent that any such information constitutes financial advice, it does not take into account any person’s particular financial situation or goals. We recommend you obtain independent tax advice for your own circumstances. FRCS does not accept any liability for the use of, or reliance on, this information.

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For more information, please contact us on hotline 1326 or email us on info@frcs.org.fj.

 

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