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New tax changes reduce burden on small businesses

Jan FrankJan Frank

A ‘very small business’ as defined in the new Draft Revenue Laws Amendment Bill – a business with a turnover that does not exceed R1 million – may in future opt to be taxed on gross turnover rather than on taxable income.

This is valid for both incorporated and unincorporated businesses. Individuals, businesses rendering professional services and public benefit organisations do not qualify.

Very small businesses that wish to have this option, will be able to register for PAYE and UIF but not for VAT. The proposed implementation date is 1 March 2009.

Should a business with a turnover of less than R1 million therefore choose to voluntarily register for VAT, it will be unable to also register for the turnover tax.

The proposed tax rates, which are below those originally proposed in the 2008 budget, are as follows:

Turnover Tax liability
R0 – R100 000 Exempt
R100 001 – R300 000 1% of the amount exceeding R100 000
R300 001 – R500 000 R2 000 plus 3% of the amount exceeding R300 000
R500 001 – R750 000 R8 000 plus 5% of the amount exceeding R500 000
R750 001 and above R20 500 plus 7% of the amount exceeding R750 000

For further information on the new turnover-based tax, contact Jan Frank of the Small Business Division, Tenk Loubser Incorporated (Somerset West), tel. 021 852 0382 or