So you may be wondering, are there any tax benefits if your business is currently turning over less that R1 Million per annum?
This is where “turnover tax” comes in, and it is applicable to sole proprietors, partnerships and companies. This tax is elective, and should qualifying businesses choose to participate in it, the various taxes such as income tax and others will be replaced by this singular tax – which is lower than the standard tax system. Small businesses can choose to still remain in the VAT system if they so desire.
The tax table is summarised below and it is based on applying a tax rate to your business turnover:
Turnover Marginal Rates for 2013_________________
R 0 – R 150,000 0%
R 150 001 – R300 000 1% of each R1 above R 150 000
R 300 001 – R500 000 R 1 500 + 2% of the amount above R 300 000
R 500 001 – R 750 000 R 5 500 + 4% of the amount above R 500 000
R 750 001 and above R 15 500 + 6% of the amount above R 750 000
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Small enterprises with under R 150, 000 per annum turnovers are exempt, while the respective amount and percentage of tax increases gradually with turnover amounts.
Now that we understand Turnover Tax, what are your options if you are registering a company, for instance? This is where small business corporations “reduced tax incentives” come in…