How can the turnover tax system provide a win-win situation for both the taxpayer and revenue authority?The administrative responsibility is reduced for the taxpayer; it is also possible for the taxpayer to incur a lower tax liability if the aforementioned tax table for turnover is implemented. SARS would benefit by increasing its registration of taxpayers without introducing punitive measures. Therefore, it can be argued that the turnover tax is mutually beneficial.How would the tax practitioner a SAIPA member –benefit from turnover tax?From SAIPA tax-desk’s experience, it is realised that it is usually a one-person tax practitioner that is saddled with voluminous late / delayed tax returns. Small-scale tax practitioners with many small clients – in terms of business size – but who constitute a large volume of a tax practitioners’ client base will benefit to a great extent. The turnover tax system will allow these tax practitioners to spendless of the valuable time in `administering ‘small clients who are enrolled for the turnover tax system and allow them to spend more of their valuable time in servicing their larger and more-time demanding clients; this tax system could allow the tax practitioners to retain the existing clientele base and also improve the service delivery to larger clients.What pitfalls are there, if any, in this system of taxation?A turnover tax is a tax on turnover that the taxpayer is required to pay. It means that even if the taxpayer’s company is not making a profit, turnover tax has to be paid. If, for example,the turnover is R750 000 in the year of assessment ending 31 March 2012, and the taxpayer’s business shows a loss of R75 000, the taxpayer is still liable for turnover tax of R15000. If the taxpayer did not subscribe to the turnover tax regime, the taxpayer would have recorded an assessed loss which is carried over to the next period of assessment. Micro businesses with uncertain profit margin should be cautious when selecting this system of tax administration.Micro businesses always resent the complexity of their tax system. To keep records in order to develop an income and expenditure statement as well as to calculate a taxable income for a micro business is complex, administratively difficult and an expensive exercise. In order to develop as implified option for micro business one tries to reduce such complexities and minimise administration, the consequence is that compromises are inevitable. The turnover tax, as such, is no exception.This tax is instituted to address a particular concern of the micro business community, that is, to provide a simplified system of taxation. It is beyond doubt that turnover tax reduces complexity. However, the development of simple tax systems contain inevitable trade-offs. Precise calculations are done away with. This is unfortunately what happens in such instances and that is why a taxpayer cannot claim a loss since the regime is based on turnover. It is not possible to have the benefit of precision as well as the benefit of extremely simple record keeping. The question of potential tax savings by opting for the normal tax system should thus be weighed up against the costs of preparing records, financial statements and returns for the normal tax system. In any event, at a turnover of R750 000 a business falls into the highest bracket for turnover tax and should consider making the transition to the normal tax system.