A natural person (sole proprietors and partners in a partnerships) or a company (including a close corporation and a co-operative) may qualify as a micro business if the qualifying turnover for the year of assessment does not exceed R1 million. The qualifying turnover includes the total receipts from carrying on business activities, excluding any amount of a capital nature and amounts exempt from normal tax. The following persons are specifically excluded from qualifying as a micro business:
- Persons who hold any shares or have any interest in the equity of a company other than, amongst others, a listed company, a portfolio in collective investment schemes, interests in body corporates and venture capital companies.
- If more than 20% of a natural person’s total receipts consists of income from a professional service (e.g. accounting, engineering, education, consulting, financial service broking, etc) or in the case of a company, more than 20% of the income consists of investment income (annuities, dividends, interest, rental income, royalties and income from the disposal of financial instruments) and income from rendering a professional service.
- Personal service providers and labour brokers.
- If that person’s receipts from the disposal of immovable property and other assets used mainly for business purposes exceeds R1,5 million over a period of three years (current year of assessment and two preceding years).
- A company which has a year of assessment not ending on the last day of February, has shareholders other than natural persons, has shares in any other company, is a public benefit organisation or a recreational club.
- A partnership with partners other than natural persons, partners who are partners in more than one partnership or the qualifying turnover of the partnership exceeds R1 million.