Small Business Tax Relief

Small Business Tax Relief


In the 2013 budget speech Finance Minister, Pravin Gordhan, mentioned that there would be further tax relief for small businesses, including an increase in the monetary tax thresholds applicable for Small Business Corporations (SBCs). There are specific criteria that apply for qualification as a small business.

These include the fact that all shareholders must be natural persons (individuals), and that the annual gross income must not exceed R20 million (up from R14 million). In addition to this, personal service providers are excluded and no more than 20% of gross income may come from investments or from rendering personal services.

Shareholders are limited in respect of other business interests that they may hold.

If your business entity’s annual turnover is R1 million or less you would qualify as a ‘micro enterprise’ and could make use of the ‘turnover tax’ provisions. This is a simplified turnover based tax system substituting income tax, CGT and in certain circumstances, VAT.

This applies not only to companies, but also to sole proprietors, partnerships, close corporations, companies and co-operatives. With effect from years of assessment commencing 1 March 2012, a micro business can voluntarily exit the turnover tax system at the end of any year of assessment. However, once out of the turnover tax system, the taxpayer will not be permitted to re-enter. Personal services rendered under employment like conditions and professional services are excluded.

Should you require any additional information regarding either Small Business Corporations or Turnover Tax contact Dave Beattie: [email protected].