Turnover Tax

http://www.pkf.co.za/media/174665/pkf.pdf

Davis Tax Review Committee
The committee recommended the replacement of small business corporation accelerated deductions and progressive tax rates with an annual tax compliance rebate, subject to certain conditions. The committee also recommended the retention of turnover tax on micro businesses with a reduction in tax rates on taxable turnover.

As from 1 March 2009, a simplified turnover-based tax system was introduced for small sole proprietors, partnerships and incorporated businesses with a turnover of less than R1 million per year.

This system is elective. With effect from years of assessment commencing 1 March 2012, a micro business can voluntarily exit the system at the end of any year of assessment. However, once out of the system the taxpayer will not be permitted to re-enter.

Prior to this, a three year lock-in period existed for exit and re-entry into the system. Personal services rendered under employment-like conditions and
certain professional services are excluded from this system to which the following tax rates apply:

Turnover
R 0 – R 150 000 Nil
R150 001 – R 300 000 1% of the amount over R 150 000
R300 001 – R 500 000 R 1 500 + 2% of the amount over R 300 000
R500 001 – R 750 000 R 5 500 + 4% of the amount over R 500 000
R750 001 – R1 000 000 R 15 500 + 6% of the amount over R 750 000

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