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Budget speech brings relief to SMEs

30 Mar 2015

Cheslon SmitIt is clear from the 2015 budget speech that the South African government seems committed to developing the small business sector in the country. Initiatives were discussed that will support the growth and development of small and medium enterprises (SMEs).

One of the Finance Minister’s strategic priorities for 2015 is to unlock the potential of small business enterprises. R3,5 billion has therefore been allocated to the new Ministry of Small Business Development for mentoring and training support to small businesses.

Referring to micro businesses with a turnover of less than R335 000 a year, the Minister proposed that these businesses do not pay tax in future. Other brackets for turnover tax have also been significantly adjusted. A business with a turnover of R750 000 will now pay just R6 650 in taxes, rather than R15 500. Businesses with a turnover of between R750 000 and R1 million will be taxed at 3% rather than 6%.

In addition, the establishment of small business desks at SARS will assist SMEs to comply with challenging tax requirements. Hopefully this will ensure that less time is spent complying with the various processes.

There was, however, little support for small and medium enterprises breaking through the R1 million turnover barrier. As a micro business owner, it may therefore make sense to stay small by not exceeding a turnover of R1 million, thereby benefiting from better tax incentives and less regulatory difficulties.

 

Article by Cheslon Smit of Exceed (Cape Town) Inc, Somerset West.  For more information please contact them on 021 852 0382

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