SARS Urges VAT-Registered Schools To Deregister
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Every supply a school makes went exempt on 1 January 2026. Seven months later, plenty of schools are still registered, still charging VAT on the hall hire, still claiming input tax. SARS has now issued a media release asking them to come and deregister.
SARS called on schools registered under the South African Schools Act that are registered as VAT vendors to apply for cancellation of that registration. The change comes from the Taxation Laws Amendment Act 5 of 2026, which amended the VAT Act with effect from 1 January 2026.
From that date all supplies made by schools are exempt, except to the extent that a school conducts qualifying welfare activities. A school may not charge VAT and may not deduct input tax on supplies made from 1 January 2026, and VAT returns already submitted for periods from that date must be corrected where necessary.
Nothing happens automatically. The school has to apply.
Guidance documents for schools exiting the VAT system
For more guidance refer to:
How to apply: the VAT123e form and the prescribed wording
Complete the VAT123e, the application for cancellation of registration. The reason for cancellation must read: "All enterprise activities have ceased on 31 December 2025". Email the completed form to SARS with the subject line "VAT deregistration, Schools". A school can instead book a virtual appointment through the SARS eBooking system, selecting "Other" as the reason category and "VAT and PAYE registration/deregistration" as the reason for appointment.
Exit VAT and payment arrangements on deregistration
Cancellation triggers a deemed supply under section 8(2) of the VAT Act of the goods and rights the school still holds. A hall, a bus fleet, smartboards bought with input tax claimed. Output VAT arises even though nothing was sold, and school cash flow runs on term fees.
Where exit VAT is payable, SARS says a request for payment arrangements may be submitted together with the VAT123e. Registration is cancelled once the exit VAT has been declared and paid, or once the school has complied with the arrangement agreed with SARS. That is why the request goes in with the form and not three months later after an assessment lands.
Schools that want to stay VAT registered need a Commissioner's ruling
A school that wants to remain registered in respect of qualifying welfare activities must obtain written confirmation from the Commissioner by way of a ruling. Not a call to a branch, a ruling.
Three checks for every school on your client list
Is the school still registered as a VAT vendor?
Did it charge VAT on any supply after 1 January 2026, and were those returns corrected?
What assets does it hold, and what is the exit VAT exposure on them?
Do that work now and you are advising. Wait for the assessment and you are apologising. Education is not the only sector where the exempt line moved, either. The rulings we unpacked in Two New VAT Rulings show SARS splitting a single university funding stream across exempt and taxable milestones.
