Print Page   |   Report Abuse
News & Press: Opinion

New relief for small enterprises

07 August 2014   (1 Comments)
Posted by: Author: Webber Wentzel
Share |

Author: Webber Wentzel

In a review released by the Davis Tax Committee during July 2014, it was concluded that the lower tax rates applicable to small business corporations (SBCs) were not as effective as intended and resulted in tax relief only applicable to about 50 000 small entities, not all of which were in the professions intended to benefit. In order to promote the intention of SBC growth and provide relief for their tax compliance costs, it is proposed that all entities (including those with an annual turnover between ZAR1 million and ZAR20 million) would be subject to the normal corporate rate of 28%, but a refundable annual rebate of ZAR15,000 would be granted to SBCs. The primary purpose of the rebate will be to assist small enterprises with their tax compliance costs. This amendment is proposed to provide more effective relief to the 50% of SBCs with a turnover of less than ZAR1 million. The rebate will also assist businesses in a loss position, as it will be refundable.

Further, it is proposed that entities which fund qualifying SMEs (businesses with a turnover up to ZAR20 million) will receive tax relief in a form similar to that of public benefit organisations (PBOs). The receipts and accruals of qualifying non-profit entities which provide funding and other assistance to SMEs will be exempt from income tax, and SMEs, which receive funding from these approved entities will be exempt from income tax on those funding receipts. In order to qualify as a SME funding entity, such entity will be required to seek approval from SARS similar to the current procedure in place for PBOs. The purpose of these amendments is to assist non-profit entities which fund, train and support SMEs, and encourage more funding to SMEs, and further allow SMEs to better utilise the funding received.

This article first appeared on webberwentzel.com.

Comments...

Christo Strydom says...
Posted 28 August 2014
Ha ha ha ha .... This must be the JOKE of the year. A SBC that makes a profit of R550 000 currently pays R59 451 income tax per annum. With this "scheme" they will pay R154 000 income tax and get a rebate of R15 000 – Thus paying a wopping R139 000 in income tax. This is an increase of R79 549 in income tax. How is an increase of this size by SARS going to grow SBC's and provide relief? Tax compliance cost is extremely small if compared to this massive jump in income tax. CRAZY

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

Membership Management Software Powered by YourMembership  ::  Legal