Small Business Tax
Save Money with Small Business Tax
Private company tax rate 28%
Small Business tax rates
|Taxable income||Rates of business tax|
|R 0 – R 87300||Nil|
|R 87301 – R365 000||7% of the amount over R 87300|
|R365 001 – R550 000||R19439 + 21% of the amount over R365 000|
|R550 001 +||R58 289 + 28% of the amount over R550 000|
Requirements for Small Business Corporation:
- All shareholders or members throughout the year of assessment are natural persons who do not hold shares in any other private company or members’ interest in any other close corporation or co-operative other than those which:
- are inactive and have assets with a market value less than R5 000; or
- have taken steps to liquidate, wind-up or deregister (effective for years of assessment commencing on or after 1 January 2011).
- Gross income for the year of assessment does not exceed R20 million (2013: R14 million).
- Not more than 20% of the gross income and all capital gains consists collectively of investment income and income from the rendering of a personal service.
- Investment income includes any annuity, interest, rental income from immovable property, royalty or any income of a similar nature, local dividends, foreign dividends (as from 1 April 2012) and any proceeds derived from investment or trading in financial instruments (including futures, options and other derivatives), marketable securities or immovable property.
- Personal service includes any service in the field of accountants, actuarial science, architecture, auctioneering, auditing, broadcasting, consulting, draughtsmanship, education, engineering, financial service brokering, health, information technology, journalism, law, management, real estate broking, research, sport, surveying, translation, valuation or veterinary science, performed personally by any person who holds an interest in the company, co-operative or close corporation, except where such small business corporation employs three or more unconnected full-time employees for core operations throughout the year of assessment.
- The company, close corporation or co-operative is not a personal service provider or venture capital company
Small business corporations allow small businesses to pay less business tax legally and thus have more capital to invest and grow faster.
SARS introduced special capital incentives for the manufacturing industry – a SBC may deduct 100% of the cost of manufacturing assets in the year it was purchased.
Other industries may deduct the capital investment over three years 50:30:20
Tax Clearance Certificate
SARS issues tax clearances if all returns and business tax are up to date. The clearance is valid until a return or money becomes outstanding. Then the tax clearance becomes invalid until the company taxes are up to date again.