Small Business Tax

If you own a small business, you could be saving just under R60 000 in small business tax when compared to normal tax rates. You can also avoid hefty penalties because of non-disclosure.

Let’s start by defining a small business. According to the South African Revenue Service (SARS), a small business is defined as a company with a turnover less than R14m a year. For a close corporation the member must be a natural person and not part of another organisation.

Small Business Tax Changes 2010

Based on the 2010 Budget Speech, small businesses will not be taxed on the first R57 000 of taxable income, where after they will be taxed on a 10% sliding scale that goes up to R300 000. Normal corporations get taxed on a flat rate of 28%. If you are a small business and would like to benefit from this small business tax benefit you must tick the box on your annual tax return that asks if the corporation is a small business.

Benefits from wages

According to Finance Minister, Pravin Gordhan, companies that hire a young person without any working experience will receive a wage subsidy.

Voluntary Disclosure Programme

This programme will reach all small businesses that haven’t been compliant because of things like cash-flow problems etc. If small businesses give full disclosure of their past transgressions between 1 November 2010 and 31 October 2011, they will only pay the full amount of tax due on their income tax, PAYE or VAT. They will not be issued with penalties and SARS will be lenient with regards to the interest.

If you don’t disclose past transgressions, you will be smacked with treble tax and penalties. If you decide you do want amnesty, you must complete an application form and fully disclose your income not declared.

And please don’t wait until SARS catches up with you and request monies, rather approach SARS with past transgressions; they have proven to treat honest taxpayers with leniency.

For any small business tax queries, or any other tax related queries, contact Tax Relax for professional and up-to-date tax service.

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