Registered micro businesses are taxed on receipts from turnover rather than profits.
We are of the view that this is a terrible approach to taxation. Think carefully before deciding to register!
The object is to simplify compliance and books of account need not be kept.
Registered micro businesses must ignore capital gains and losses on sale of fixed property to the extent that it was used for business purposes.
They must also ignore capital gains and losses on sale of other fixed assets used mainly (i.e. more than 50%) for business purposes.
Who qualifies –
Natural persons in business (or deceased estates of such persons) provided that –
the persons turnover does not exceed R1m during the tax year and
the person may not hold any interest in a private company (or CC) during the tax year and
no more than 10% of that person’s total receipts consists of investment income and
the person was not a personal services provider or labour broker (except if exempt) during the tax year and
the person has not rendered professional services during the year and
the total of all amounts received on disposal of fixed assets of a capital nature (including fixed property) used for business purposes does not exceed R1,5m over the past three years.
Persons who are in a partnership are further restricted and shall not qualify if –
any of the partners was not a natural person during the tax year or
any of its partners were partners in another partnership during the tax year or
the partnership turnover exceeds R1m during the tax year.
Companies (or CCs) with a turnover of not more than R1m will qualify unless –
the year end of the company is other than the last day of February or
any of its shareholders were not natural persons (or a deceased estate) during the tax year or
any of its shareholders held shares in any other private company during the tax year or
it is a PBO or recreational club.
Registration is voluntary
before the new tax year or
within 2 months of commencement of business
Re-entry after exit is no longer permitted.
voluntary at the end of any year of assessment
Compulsory if no longer qualifying to be registered.
Trap You may not register for VAT (so no input VAT claims)
Trap You may still pay tax even if you are making a loss and losses cannot be carried forward because this is a turnover tax.
Should you wish to make an appointment, please feel free to visit Derek’s diary and book a time that suits you.
Need a shelf company or CC, a tax clearance, VAT registration or B-BBEE certificate? We offer a wide range of such services.