Turnover tax is a system aimed at making it easier for a 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.
So, turnover tax is worked out by applying a tax rate to the taxable turnover of a micro business. The rates are applicable for any year of assessment ending during the period of 12 months ending on 28 February 2018:
|Turnover (R)||Rate of tax (R)|
|0 - 335 000||0%|
|335 001 - 500 000||1% of each R1 above 335 000|
|500 001 - 750 000||1 650 + 2% of the amount above 500 000|
|750 001 and above||6 650 + 3% of the amount above 750 000|
Turnover Tax, as stated earlier, is for micro businesses with an annual turnover of R 1 million or less. The following taxpayers may qualify:
A natural person or company may be excluded from the Turnover Tax regime if:
It should be sent before the beginning of a year of assessment (a year of assessment runs from 1 March to 28 February), or a later date that may be determined by the Commissioner in a Government Notice.
The timing differs slightly for new registrations and existing registered businesses:
Should a new micro business start trading during a year of assessment and wishes to register for turnover tax, an application must be sent within two months from the date that the business started.
Existing micro businesses can register for or switch to turnover tax before the start of a new tax year.
You can send the completed form to your nearest SARS branch.
A person may elect to voluntary de-register before the beginning of a year of assessment or a later date announced by the Commissioner in a Government Notice. Deregistration will be effective from the beginning of that year of assessment.
You may be forced to deregister if your turnover exceeds R1million for a given tax year or certain qualifying criteria are no longer met. In the case of a compulsory deregistration, the business will be deregistered from the beginning of the month following the month during which they no longer qualify for turnover tax.
A point to note is if a person has been deregistered (volunta
The Unemployment Insurance Fund (UIF) is a system that gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependents of a deceased contributor.
The UIF act provides the benefits, to which contributors are allowed, and the imposition and collection of the contributions to the UIF, respectively. This came into operation on 1 April 2002.
All employees, as well as their employers, are responsible for contributions to the UIF. However, an employee is excluded from contributing to the UIF if:
Any employer, who is registered with SARS for Employees Tax needs to register to pay UIF contributions.
The following employers must register at the UI Commissioner’s office for purposes of paying UIF contributions, an employer who:
The maximum earnings ceiling amount means that the maximum contribution which can be deducted, for employees who earn more than R14 872 per month, is R148.72 per month.
It must be paid within seven days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day before the public holiday or weekend.
An offence is committed if a person fails to:
A person convicted of any of these offences may be liable to a fine or imprisonment for a period not more than two years.
The contribution that employers must deduct from a worker's pay is 1% of the worker's total earnings, excluding commission.
In addition to the 1% deducted from the worker, the employer also contributes 1% for every worker that they employ.
The total contribution paid to the UIF is therefore 2%.
If a worker earns R3 000 per month, the employer must deduct 1%, namely R30. In addition, the employer must pay R30 for that worker. The total of R60 must therefore be paid to the UIF or SARS.
Workers who earn more than the annual, monthly or weekly maximum earnings ceiling must also contribute to the Fund, but their contributions are worked out on the maximum earnings ceiling.
If a worker earns R10 000 per month and the monthly earning ceiling is R1 096 per month, the worker's contribution will be worked out on R8 836.
ry or compulsory) from turnover tax, they may not be registered as a micro business again.
The main advantage of turnover tax is the reduced record-keeping requirements.
The following records must be kept:
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.