s17 of the VAT Act is clear on this.

Just as expenses are only deductible for Income Tax if they are in the production of income, so Input VAT is only claimable to the extent the it is incurred for VATable sales, so, if there’s no direct connection (i.e goods in, goods out) then there’s an apportionment that needs to be applied.

This means, to take an example like bank charges. If you’re paying R575, of which R75 is VAT and your VATable sales are say, 2/3rd of your total sales, then you can claim 2/3 x R75 = R50 Input VAT.

If 95% or more of your sales are VATable, then you can claim the whole Input VAT rather than apportioning.

It’s important to understand the difference between Zero rated sales (which are included as VATable even though no VAT is charged) and Exempt sales (which are not VATable).