South African small business owners has been waiting for a break from tax for a long time. It has arrived in the form of Turnover Tax…
Turnover Tax was introduced in the 2015 Budget Review of South Africa. It is a simplified system that is aimed at micro businesses who needs to submit tax returns. The Turnover Tax replaces the Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax for micro business with a qualifying annual turnover of R1 million or less.
Advantages to Register for Turnover Tax
1. Savings for SMME’s.
It will save an average small businesses owner. Take for example John whose small business has a R 500 000 turn-over per year (R41 667 per month on average) and makes him R 240 000 profit per year (R 20 000 per month on average).
John currently pays himself a salary of the full amount of profit (R20 000) each month instead of paying Company Tax of 28%. He still need to pay Income Tax in his personal capacity though. On R 20 000 income per month John have to pay income tax of 14,4%. But with Turnover Tax, John would only need to pay tax on his R 500 000 turnover per year. Thus the comparison looks as follow:
- Paying Income Tax, John would pay: R240 000 income x 14,4% tax per year = R 34 560
- Paying Turnover Tax instead, John would pay: 1% of each R1 above R 335 000 of his R 500 000 turnover = R 1650.
John would save over R30 000 per year registering for Turnover Tax, which allows John to ONLY pay tax on his turnover (total income of the business). Thus for most small business owners, this would be a very good option to consider. The rates as per below are applicable for any year of assessment ending during the period of 12 months ending on 29 February 2016:
|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|
Calculate how much you are currently suppose to pay based on the Income Tax Calculations.
Keeping track of income and expenses, logbooks, VAT, etc. can become very tiring and frustrating process. Turnover Tax involves minimum paperwork. You need to communicate your (1) annual turnover and (2) your assets and liabilities of over R10 000 to SARS upon submission three times a year – that’s it.
Before proceeding with this service, please make sure you qualify for Turnover Tax.
The following is required:
1. You must have traded for at least 1 year to proof that your turnover (sales) is less than R1 million per year. We will require an income statement from you to proof this – we will not be able to proceed without your income statement.
2. In addition, there is a test on the SARS Website that you first need to do, so you will know if you qualify. If you answer NO on any of the questions, then you will not qualify for Turnover Tax and we cannot proceed.
Please visit the following link to ensure that you do qualify for turnover tax: Turnover Tax Requirements by SARS
1. Apply below. After you have applied below we will request payment of the fees and information from you. We can then setup your application for this service.
2. SARS Offices. We will then visit SARS’s offices on your behalf. If you did it yourself, this process could take months. If you are not a SARS specialist, who understands their systems and have relationship with the Management, SARS’s services become a challenge.
3. Receive your Turnover Tax Number. Our SARS Department will ensure that your Company is registered for Turnover Tax and receives a Tax Number in the quickest possible timeframe. Vat Inclusive.
Our in-house Tax Practitioner, Jack Liebenberg, is affiliated with
To view our SARS services, click on the links below:
|Turnover Tax Registration||R 970|
|Tax Registration Verification||R 490|
|Tax Clearance Combo (Includes Tax Registration Verification)||R 990|
|VAT Registration (Mandatory / Voluntary)||R 1 990|
|UIF & PAYE & SDL||R 1 890|
|Import / Export Number from SARS||R 3 750|
To view our latest Timeframes Click Here.