VAT – New Dwelling House Claim
The New Dwelling House VAT Refund scheme is a tax incentive to encourage Fiji citizens to own homes by either buying or building it for the purpose of living in it. This incentive is available from 1st January 2012.
Who can apply for the refund?
An eligible person can apply for a VAT refund by completing the prescribed forms. An eligible person includes:
- a Fiji citizen; or
- a non-profit body approved by the CEO of FRCS that provides homes (residential accommodation) for the under-privileged in Fiji.
An eligible individual (Fiji citizen) may apply for a refund on his/her first residential property.
A non-profit body involved in the provision of free housing for the underprivileged may apply for a New Dwelling House refund for each New Dwelling House constructed.
For joint owners who are eligible, a joint application may be made.
What is a ‘New Dwelling House’ for the purposes of this VAT refund claim?
The terms ‘dwelling house’ and ‘new’ for VAT purposes means a building which was built or purchased exclusively for the eligible person’s household to live in.
– a house that has not been used by any person; or
– a house that has been acquired or held for use by the person acquiring it; or
– an existing house that is sold by a VAT registered person to an eligible person – in this context, the house is ‘new’ for the purchaser.
“Dwelling house” means:
– a new or existing house acquired from a VAT registered person;
– a new house built by the eligible person;
– a new house built by a contractor hired by the eligible person;
– land on which the New Dwelling House is built and appurtenances included in the approved or initial plan that is attached to the house. Appurtenances include garage, fencing and driveways, etc.
An eligible person can claim a refund for the amount of VAT paid for acquiring the home or VAT paid for building materials and services but only up to a maximum VAT inclusive price of $120,000.
1) if an eligible person acquired/built a New Dwelling House costing less than $120,000, all VAT paid may be refunded;
2) if an eligible person acquired/built a New Dwelling House costing $120,000 or more, the maximum refund allowable is:
(i) $15,652.17 ($120,000 x 3/23) for supplies made up to 31 December 2015 ; and
(ii) $9,908.25 ($120,000 x 9/109) for supplies made from 1 January 2016.
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
(i) VAT Exclusive Price – $150,000
(ii) VAT (9%) – $13,500
(iii) 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
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:
(i) VAT Exclusive Price – $120,600
(ii) VAT (15%) – $18,090
(iii) VAT Inclusive Price $138,690
Calculation of 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
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 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.
2016 – $20,000 x 9/109 = $1,651.38
2015 – $100,000 x 3/23 = $13,043.48
Total VAT Refund due to Mr. F is $14,694.86
How do you apply?
Eligible persons must complete the Application for refund of VAT on Acquisition of a New Dwelling House form (IRS032) and send it to FRCS together with the VAT Input Schedule (IRS033) and requirements as per checklist below.
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.
What is the time frame to claim refund?
For those who purchase a house from a VAT registered person, an application for a New Dwelling House VAT refund must be made in the approved form and submitted with tax invoice issued by the seller and other supporting documents within 3 years of acquisition.
For those who build their own homes, an application for a New Dwelling House VAT refund must be made in the approved form and submitted with VAT input Schedule and other supporting documents within 3 years from the date of completion. This simply means that in order to obtain a refund of VAT included in the price of land, the person must build a house and lodge a claim for both the land and house within 3 years. The person cannot claim as the work progresses. They must wait until the dwelling is completed and a certificate of completion is issued. If a certificate is obtained before the dwelling is completed, the person will not be able to claim expenses incurred after the certificate was issued.
For further assistance you can send an email to firstname.lastname@example.org .