Tax and SARS knowledge base
Must a South African school cancel its VAT registration in 2026?
Must a school apply to cancel its VAT registration after the 2026 change to exempt school supplies?
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Direct answer
Yes, most schools registered under the South African Schools Act that are VAT vendors must apply for VAT deregistration because supplies made by a school became exempt from 1 January 2026. Cancellation is not automatic. SARS says affected schools must submit the VAT123e application by 30 September 2026.
A school conducting qualifying welfare activities may remain registered to that extent only after obtaining the required VAT ruling.
What this means in practice
The school should state on VAT123e that all enterprise activities ceased on 31 December 2025 and disclose enterprise assets held at that date. It must also correct VAT treatment from 1 January 2026.
If VAT was charged after that date, declare it in the relevant VAT201. To recover the amount from SARS, issue a credit note and refund the recipient, then make the permitted deduction in the return period. Input tax claimed on post-change purchases must be reversed through Request for Correction.
The school must calculate deemed exit VAT on relevant goods and rights retained at 31 December 2025. SARS says the tax fraction applies to the lower of cost or open market value, subject to exclusions and adjustments. The net amount is disclosed in field 1A of the VAT201 for the period containing December 2025 through an RFC.
Step-by-step
- Confirm that the entity is a school covered by the 2026 amendment and identify any welfare activities.
- Stop charging VAT on exempt school supplies from 1 January 2026.
- Review VAT201 returns submitted from January 2026 for output and input tax errors.
- Issue credit notes and refund recipients where VAT was charged incorrectly.
- Inventory enterprise assets and rights held on 31 December 2025.
- Calculate exit VAT and any permitted adjustment for partly claimed input tax.
- Submit the required RFC for the VAT period containing December 2025.
- Complete VAT123e using SARS's prescribed cessation reason.
- Submit the application by 30 September 2026 and include a payment-arrangement request if needed.
- Continue filing required nil or corrective returns until SARS completes deregistration.
Documents and records to keep
- VAT123e and submission proof.
- Asset register at 31 December 2025.
- Cost, valuation and input-tax records for enterprise assets.
- Exit-VAT calculation and apportionment history.
- Credit notes and proof of customer refunds.
- Corrected VAT201 returns and RFC confirmations.
- Payment-arrangement agreement and PRNs.
- VAT ruling for qualifying welfare activities, if applicable.
Important limits and exceptions
Deregistration is not immediate. SARS says a school is finally deregistered only once exit VAT is paid in full or the agreed payment arrangement is completed. Schools may pay exit VAT from 1 January 2027 in 12 equal monthly instalments, or another period agreed with SARS.
Assets on which input tax was denied, such as certain motor cars and entertainment expenditure, are not automatically included. Older assets are not excluded merely because more than five years have passed.
Applications, credit notes and corrections have separate deadlines. The November 2026 tax period is relevant to the final disclosure of post-January credit notes described by SARS.
When to get tailored advice
Get VAT advice where the school owns property or valuable assets, used assets partly for taxable activities, lacks old records, charged VAT after January, operates a shop or boarding activity, or may qualify as a welfare organisation.