What is it?
Turnover tax is a simplified system aimed at making it easier for micro business to meet their tax obligations. The turnover tax system replaces Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax for micro businesses with a qualifying annual turnover of R 1 million or less. A micro business that is registered for turnover tax can, however, elect to remain in the VAT system (from 1 March 2012).
Turnover tax is worked out by applying a tax rate to the taxable turnover of a micro business. The rates are as follows for 1 April 2014 to 31 March 2015:
|R0 - R150,000
|R150,001 - R300,000
||1% of each R1 above R150,000|
|R300,001 - R500,000
||R1,500 + 2% of the amount above R300,000|
|R500,001 - R750,000
||R5,500 + 4% of the amount above R500,000|
|R750,001 and above
||R15,500 + 6% of the amount above R750,000|
Who is it for?
Micro businesses with an annual turnover of R 1 million or less. The following taxpayers may qualify:
- Individuals (sole proprietors)
- Close corporations
How to register?
To register for Turnover Tax:
- Do a quick test to see if you quality for turnover tax:
- For more information on how to register
How to pay?
There are three payment dates:
- 1st payment is in the middle of the tax year on the last business day of August i.e. 29 August 2014 on the TT02 – Payment Advice for Turnover Tax
- 2nd payment is at the end of the tax year on the last business day of February i.e. 27 February 2015 on the TT02 – Payment Advice for Turnover Tax
- Final payment is after the annual TT03 - Turnover Tax Return is submitted and processed
What records should be kept?
A big advantage of turnover tax is the reduced record-keeping requirements. The following records must be kept:
1. Records of all amounts received;
2. Records of dividends declared;
3. A list of each asset with a cost price of more than R10,000 at the end of the year of assessment as well as of liabilities exceeding R10,000.
To take account of the typical expenses incurred by a micro business and to eliminate the need for detailed recordkeeping of deductible tax expenses, the turnover tax rates are significantly lower than the tax rates under the standard tax system.
The following will help you with your record keeping: