Schools that ceased conducting taxable enterprise activities from 1 January 2026 should now be completing their final VAT checks. SARS guidance confirms that affected schools must still manage outstanding corrections, disclose relevant exit VAT and submit the required documentation before the November 2026 tax period closes.

The change follows amendments to the VAT Act contained in the Taxation Laws Amendment Act 5 of 2026. SARS states that ordinary school activities became exempt from VAT from 1 January 2026, although schools must still apply for VAT deregistration rather than being cancelled automatically. The deregistration application deadline was 30 September 2026. SARS guidance on schools exiting the VAT system was last updated on 1 September 2026.

What schools should check now

The November VAT period is important because SARS allows certain previously unclaimed input tax incurred before 31 December 2025 to be claimed in VAT201 returns up to and including the November 2026 tax period, provided the school has the required supporting documents.

Schools should also review whether VAT was incorrectly charged on supplies made from 1 January 2026. Where VAT was charged, the school must account for it in the relevant VAT201 return. SARS indicates that the amount may be recovered through a later deduction only where the school issues a credit note to the recipient and refunds the VAT. Credit notes and the related disclosures must be completed by the VAT returns due on or before the November 2026 tax period.

Exit VAT requires an asset-by-asset review

Schools must account for deemed exit VAT on certain goods and rights retained at 31 December 2025 where input tax was previously deducted. This can include trading stock and enterprise assets. The calculation is based on the tax fraction applied to the lower of the asset’s cost or open-market value.

The review should not be limited to recently purchased assets. SARS states that there is no five-year prescription rule for exit VAT where input tax was deducted. Older assets may therefore need to be considered, using available evidence such as the general ledger, fixed-asset register and annual financial statements.

Some items are excluded, including goods or services for which input tax was denied, such as certain entertainment expenses and motor cars, as well as donated assets acquired for no consideration. The accounting treatment should be supported by a clear working paper for each material asset category.

How the final return is handled

SARS requires the exit VAT liability, net of any permitted adjustment, to be submitted through a Request for Correction on the VAT201 return for the period in which December 2025 falls. Schools must continue submitting nil VAT returns where required until the registration is cancelled.

Although the liability is calculated from the 31 December 2025 position, SARS states that schools are only liable to pay exit VAT from 1 January 2027. Payment may be made in 12 equal monthly instalments, provided the agreed arrangement is followed.

Practical next steps for finance teams

  • Reconcile all VAT charged from 1 January 2026 and issue credit notes where necessary.
  • Confirm that refunded VAT is correctly reflected in the relevant VAT201 return.
  • Prepare an asset listing using the fixed-asset register, ledger and financial statements.
  • Separate assets on which input tax was claimed from excluded items.
  • Document any apportionment adjustment for mixed-use assets.
  • Check that the exit VAT correction, nil returns and deregistration records agree.
  • Keep a payment forecast for the instalments beginning in January 2027.

This is a specialised VAT transition requiring careful record-keeping. Schools should obtain appropriate professional advice before submitting corrections or agreeing payment arrangements. Businesses seeking broader bookkeeping, tax and compliance support can explore YFP’s accounting and advisory services.