Turnover Tax
A micro business may elect to either be taxed normally or on the turnover
bases
Applies to years after 1 March 2009
Qualifying turnover less than R1m
Why is it in place?
Business taxed on turnover basis at a very low rate
Profit not subject to normal tax
Not necessary to record trading stock at year end
Not necessary to keep record of expenses
Business taxed on receipts basis, NOT ON ACCRUAL
Debtors has no effect
Business is now allowed to register as VAT vendor
If person also earns commercial rental income, not taxed as part of micro
business income and would be subject to VAT if registered
Investment income may not exceed 10% of TOTAL receipts
Who may qualify?
CCs, Cos, Cooperatives, sole-traders or partnerships
Who may not qualify?
Natural persons
• Person has shares or any interest in any company or CC – at ANY time
during the year of assessment (exceptions of shareholdings)
• More than 20% of that person’s total receipts during that year of
assessment consists of income from the rendering of professional
services
• Person is a personal service provider or labour broker at ANY time
during that year of assessment
• Person renders professional service at ANY time during that year of
assessment
• Total of following amounts exceeds R1.5M over a period of three years
(current plus last two)
• Receipts from disposal of sale of immovable property (used for
business purposes)
• Receipts from the disposal of any other capital asset used mainly
for business purposes
, Persons not qualifying as micro-business
Company or close corporation IF:
o year end falls on any other date than last day of February
o any of the shareholders is a person other than a natural person (or the
estate of a deceased or insolvent person)
o more than 20% of income is classified as investment income
o any of the shareholders has an interest in the equity of any other
company or CC
o it is a tax exempt PBO
Partners
Any partner is not a NP
Any partner is a partner in multiple partnerships
TO exceeds R1m
The following are excluded shareholdings:
• Shares in listed companies
• Portfolios in CIS
• Interests in body corporates and share block companies
• Interests in venture capital companies as defined in s12J
• A less than 5% interest in social or consumer co-operatives or a co-operative
burial society
• A less than 5% interest in a primary savings co-operative bank or a primary
savings and loans co-operative bank; and
• Interest in friendly societies.
Investment income includes passive income in the form of dividends, royalties, rental
income form immovable property, annuities, interest and proceeds derived from
investment or trading in financial instruments, marketable securities or immovable
property
Qualifying Turnover
© Trusts cannot qualify as a microbusiness
© Qualifying turnover is:
Total receipts
From carrying on a business
Excluding capital amounts
Taxable Turnover
A micro business may elect to either be taxed normally or on the turnover
bases
Applies to years after 1 March 2009
Qualifying turnover less than R1m
Why is it in place?
Business taxed on turnover basis at a very low rate
Profit not subject to normal tax
Not necessary to record trading stock at year end
Not necessary to keep record of expenses
Business taxed on receipts basis, NOT ON ACCRUAL
Debtors has no effect
Business is now allowed to register as VAT vendor
If person also earns commercial rental income, not taxed as part of micro
business income and would be subject to VAT if registered
Investment income may not exceed 10% of TOTAL receipts
Who may qualify?
CCs, Cos, Cooperatives, sole-traders or partnerships
Who may not qualify?
Natural persons
• Person has shares or any interest in any company or CC – at ANY time
during the year of assessment (exceptions of shareholdings)
• More than 20% of that person’s total receipts during that year of
assessment consists of income from the rendering of professional
services
• Person is a personal service provider or labour broker at ANY time
during that year of assessment
• Person renders professional service at ANY time during that year of
assessment
• Total of following amounts exceeds R1.5M over a period of three years
(current plus last two)
• Receipts from disposal of sale of immovable property (used for
business purposes)
• Receipts from the disposal of any other capital asset used mainly
for business purposes
, Persons not qualifying as micro-business
Company or close corporation IF:
o year end falls on any other date than last day of February
o any of the shareholders is a person other than a natural person (or the
estate of a deceased or insolvent person)
o more than 20% of income is classified as investment income
o any of the shareholders has an interest in the equity of any other
company or CC
o it is a tax exempt PBO
Partners
Any partner is not a NP
Any partner is a partner in multiple partnerships
TO exceeds R1m
The following are excluded shareholdings:
• Shares in listed companies
• Portfolios in CIS
• Interests in body corporates and share block companies
• Interests in venture capital companies as defined in s12J
• A less than 5% interest in social or consumer co-operatives or a co-operative
burial society
• A less than 5% interest in a primary savings co-operative bank or a primary
savings and loans co-operative bank; and
• Interest in friendly societies.
Investment income includes passive income in the form of dividends, royalties, rental
income form immovable property, annuities, interest and proceeds derived from
investment or trading in financial instruments, marketable securities or immovable
property
Qualifying Turnover
© Trusts cannot qualify as a microbusiness
© Qualifying turnover is:
Total receipts
From carrying on a business
Excluding capital amounts
Taxable Turnover
