Ensure you are being taxed correctly

SARS has a number of taxation policies specifically aimed at small to medium enterprises, this is in place in order to support these companies by reducing in some cases the tax and in other the tax and compliance burden relating to running these companies. Two such taxes are

  • Small business corporation Taxation
  • Micro enterprise Taxation – Turnover tax

Small Business Corporation Tax (SBC)

Small business corporation tax is targeted at the small to medium enterprises and your business can enjoy the benefits and the reduced tax rates on your initial profits, the company however does need to meet some requirements namely;

Legal entity requirement A legal entity must be formed, any one of these will qualify
  • Close corporation (CC)
  • Private company (Pty) Ltd
  • Co-operative (Co-op)
A holder of shares requirement The holders of the shares cannot hold shares in another company with a Net Asset Value above R5000. Listed investments are excluded from this requirement.
Gross income limitation requirement Companies turnover must be less than R20,0m
Business activity requirement Companies who generate their revenue through the following methods are excluded from using SBC
  • Investment income
  • Personal service provider’s

SBC tax rates for financial years ending on any date between 1 April 2016 and 31 March 2017:

Taxable income (R)​                                 Rate of Tax (R)​

0 – 75 000                                             0% of taxable income

75 001 – 365 000                                                7% of taxable income above 75 000

365 001 – 550 000                                  20 300 + 21% of taxable income above 365 000

550 001 and above                                 59 150 + 28% of taxable income above 550 000

Turnover Tax

Turnover tax is a simplified system aimed at making it easier for micro business to meet their tax obligations. The turnover tax system replaces Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax for micro businesses with a qualifying annual turnover of R 1 million or less. A micro business that is registered for turnover tax can, however, elect to remain in the VAT system (from 1 March 2012).

Turnover tax is worked out by applying a tax rate to the taxable turnover of a micro business. The rates are applicable for any year of assessment ending during the period of 12 months ending on 28 February 2017:

 Turnover​ (R)     Rate of tax (R)

0 - 335 000        0%​

335 001 - 500 000           1% of each R1 above 335 000

500 001 - 750 000           1 650 + 2% of the amount above 500 000

750 001 and above         6 650 + 3% of the amount above 750 000

If you want to see if you qualify for these tax statuses, contact us.

 

 

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