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Turnover tax

Turnover tax

Date: 2014-07-04
Turnover tax is one of the ways SARS tries to simplify tax compliance for small businesses. It is a tax based on the taxable turnover (aka revenue) of a business and is available to sole proprietors (individuals), partnerships, close corporations, companies and co-operatives.

Turnover tax takes the place of provisional tax, income tax, capital gains tax, dividends tax and VAT (in the instance that you have not decided not to register for VAT), so qualifying businesses pay a single tax instead of various other taxes. It's elective so you can choose to change over to it at any time.

Another way small businesses are assisted by SARS is that the tax rates are generally more favourable with the tax on the first R150,000 of turnover being nil and the maximum tax on R1 million turnover being R30,500.

As with income taxes, two provisional returns are lodged and any payments are made every six months, first being in August and second in February and an annual return is done at the end of the tax year.

This form of tax is something that business owners should consider from 1 March 2014 if they qualify. It could really simplify your life.