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TAX TALK

TAX TALK

Author: Natalie Wocke
Date: 2014-05-16
SMALL BUSINESS CORPORATION TAX INCENTIVE - WHY PAY 28%?

Do you qualify for these reduced tax rates? For years of assessment ended 01 April 2014 to 31 March 2015.

There is an excellent tax incentive available to Small Business Corporations which many qualifying businesses are not taking advantage of, when in fact they do qualify.

As the name suggests, the incentive is aimed at "Small Business" that operates through the vehicle of an incorporated entity. In a nutshell, this applies only to Companies and Close Corporations. Partnership, Sole Proprietors and Trusts will not qualify for the reduced tax rates.

The "Small" limitation is in fact very wide, making the incentive available to a huge scope of Corporations, and available to many family (and other) businesses in our immediate area.

The Act goes on to list what a personal service is, and who are considered to be personal service providers. Thereafter, it goes on to state that even if you are considered to be a personal service provider, you will still qualify for the reduced tax rates, if you employ 3 unconnected persons, full time, in your core operations.

For the average business in a retail or wholesale trade, hiring or manufacturing environment, many if not most will qualify.

There are further accelerated wear and tear allowances for Small Business Corporations, allowing wear and tear to be claimed at a faster than normal rates.

Businesses engaged in a process of manufacture, most notably the plant hire and earthmoving sector, may qualify to claim 100% wear and tear allowance in the year of acquisition of expensive heavy machinery.

The effects of the reduced tax rates, and accelerated wear and tear allowances, reduce tax payable in the early years of business, or result in assessed losses in some cases, and this impact immensely on the cash flow available for reinvestment into your business.

Make an appointment to assess you eligibility for these allowances. You may even have qualified for the reduced tax rates for the 2014 year of assessment, at applicable rates. Ensure you consult with us before you prepare your 2014 Annual Financial Statements and tax return, for your Company or CC.

For more information contact Roberts & Chaplin on 031 586 0387