SARS Turnover Tax South Africa
What is turnover tax?
Micro business needed a different tax approach. The compliance burden otherwise would be crippling for the Micro Business. A new tax system called Turnover Tax provides relief to Micro Businesses. This new system addresses some of the pain points for micro businesses.
The turnover tax system replaces all other systems for example:
- Income tax
- VAT
- Provisional Tax
- Capital Gains tax.
- Dividends tax
The micro business must have a qualifying annual turnover of R1 million or less.
Important to note: A micro business can elect to remain in the VAT system.
Who is eligible to register for Turnover Tax
Micro businesses with an annual turnover of R1 million or less.
Taxpayers that could qualify to register for turnover tax are:
- Individuals
- Sole Proprietors
- Partnerships
- Close Corporations
- Companies
- Co-operatives
How do I register for Turnover Tax
You first need to establish whether you qualify for turnover tax. If you are eligible to register, then you would need an appointment with SARS to process your registration.
Turnover Tax Calculator - here are the tax rates:
For years of assessment of any date ending between 1 March 2022 - 28 February 2023
Turnover AND Rate of tax
0-335 000 - 0%
335 001 - 500 000 - 1% of each R1 above 335 000
500 001 - 750 000 - 1650 + 2% of the amount above 500 000
750 001 and above - 6650 + 3% of the amount above 750 000
For years of assessment of any date ending between 1 March 2021 - 28 February 2022
Turnover AND Rate of tax
0-335 000 - 0%
335 001 - 500 000 - 1% of each R1 above 335 000
500 001 - 750 000 - 1650 + 2% of the amount above 500 000
750 001 and above - 6650 + 3% of the amount above 750 000
Quick test for Individuals and Companies
By answering the following questions you will be able to determine if a business meets the criteria to qualify for turnover tax registration.
If the answer to any one of the questions is “NO”, the business will not qualify for turnover tax registration for that year of assessment.
A partner in more than one partnership will not qualify for “turnover tax”. The other partners may still qualify if they are only partners in a single partnership and do not answer “No” to any of the questions below.
- Will the “qualifying turnover” of the business be less than or equal to R1 million for the year of assessment?
- Do you declare that the business is not a “personal service provider” or a “labour broker” without a SARS exemption certificate?
- Does the business trade in one of the following forms: sole proprietor, partnership, close corporation, co-operative or company?
- If the business is a partnership, do you declare that all the partners will be individuals throughout the year of assessment?
- If the business is a close corporation, co-operative or company, do you declare that all of the shareholders/members will be individuals throughout the year of assessment?
- Do you declare that the business is not a public benefit organisation, recreational club, association of persons or a small business funding entity?
- Does the business have a year of assessment that ends on the last day of February?
- Do you declare that the owner, any partner, shareholders, members and the business do not hold shares/interests in a close corporation, company, or cooperative other than the following exceptions:
- Listed South African companies;
- Collective investment schemes;
- Body corporates and share block companies;
- Venture capital companies;
- Less than 5% in social or consumer co-operatives;
- Less than 5% in cooperative burial societies or primary savings co-operative banks;
- Friendly societies;
- Any other company that did not trade during any year of assessment and which did not own assets with a total market value that exceeds R5 000 during any year of assessment;
- Any company that has taken steps to liquidate, wind up or deregister?
a) If you are a natural person, do you declare that the income from “professional services” is not expected to exceed 20% of your total receipts during the year of assessment
b) If the business is a company, close corporation or co-operative, do you declare that income from “professional services” and “investment income” is not expected to exceed 20% of the total receipts for the year of assessment?
Do you declare that the income from the disposal of assets by the business over the year of assessment and the past two years of assessment is not expected to exceed R1.5 million in total?
Do you declare that the business was not previously registered for the Turnover Tax?
Do you need our help registering and submitting your Turnover Tax?
Zeelie Professional Accountants SA can assist you with registering, calculating your income, preparing your assets and liabilities and then submitting your returns to SARS.
Contact our team via any of the following channels:
FREQUENTLY ASKED QUESTIONS:
What is taxable turnover for turnover tax purposes?
Taxable turnover for a registered micro business includes all the amounts received. Excluded are amounts of a capital nature. It covers the amounts received by that business during any tax year of assessment from their business activities in South Africa.
How do I register for Turnover Tax?
You first need to establish whether you qualify for turnover tax. If you are eligible to register, then you would need an appointment with SARS to process your registration.
How do I deregister Turnover Tax?
Deregistration can be voluntary or if your turnover exceeds R1million then you would be forced to deregister.
The deregistration must be made in writing to the commissioner.
How can I pay taxes
You can pay by doing an EFT to SARS or at your local bank.
At which intervals do I pay Turnover Tax
Turnover tax has two interim payments and then an annual return which is submitted during tax season which is usually open between July and January.
1st Interim payment = 6 months into the tax year - Based on 15% of total taxable turnover
2nd interim payment = 12 months into the tax year - Based on 65% of total taxable turnover (less the first 15% interim payment)
Annual payment = in tax season Based on 35% of total taxable turnover
What records should be kept
The advantage of this tax system is the relief from the responsibility of record-keeping.
The following are records that must be kept:
- Records of all the amounts received.
- Records of all dividends declared.
- A list of each asset & liability with a cost price of R10000 or more.
What are the benefits of Turnover tax
- Less record-keeping
- Lower tax rates
- Ability to get your business start-up off the ground.
- Reduced business compliance expenses.
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