UCT Clarifies VAT Treatment for Research Projects Involving Students

The University of Cape Town (UCT) has issued a new circular to guide researchers and administrators on the correct application of VAT for contract research projects, in line with the SARS VAT Class Ruling for Universities (VCR).

The circular outlines that the extent to which input VAT can be claimed depends on student involvement in the research. If students are involved—whether through bursaries, administrative support, or other contributions—UCT may only claim 50% of the applicable VAT rate. Projects without student involvement may claim the full 100%.

Given UCT’s academic mission and the frequent integration of students into research activities, the university has adopted a default position that student involvement is presumed in all contract research projects. Exceptions will only be considered if the Principal Investigator (PI) provides documented evidence of no student involvement, or if the third-party funding agreement explicitly states this.

Faculty Finance Offices must confirm such exceptions before any SAP fund is opened. Researchers are also reminded to factor in the non-recoverable portion of VAT when budgeting for qualifying costs.

UCT emphasised that this approach ensures compliance with SARS regulations while maintaining the integrity of its research and academic activities.