Turnover Tax

SARS has launched a tax system for small businesses that will decrease the time and cost of submitting tax returns. "Turnover Tax" is now officially available to qualifying small businesses and replaces income tax, provisional tax, capital gains tax, secondary tax on companies and VAT.

Independent research shows that it costs small businesses "an average of about R7 000 a year to ensure that tax returns for income tax, provisional tax, VAT and employees' tax are prepared, completed and submitted as required".

In an effort to reduce the time and costs related to tax compliance for small businesses, and to encourage entrepreneurship, the Turnover Tax system allows small businesses with a turnover up to R1 million a year to only submit two interim returns and a final return for assessment. This is a great deal less than the average 10 assessments many SMEs must submit annually.

The simplified system is voluntary and available to sole proprietors, partnerships, close corporations, co-operatives and companies - provided they have a taxable turnover of R1 million or less in a year of assessment and meet certain other criteria.

It is not available to labour brokers, personal service providers or persons that rendered professional services. Public benefit organisations and recreational clubs also do not qualify.

The turnover Marginal rates are:

R0 - R100 0000%
R100 001 - R300 0001% of each R1 above R100 000
R300 001 - R500 000R2 000 + 3% of the amount above R300 000
R500 001 - R750 000R8 000 + 5% of the amount above R500 000
R750 001 and aboveR20 500 + 7% of the amount above R750 000