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I had a meeting with a guy who had this great scheme to save tax.

He’s an investor in residential property and was going to register various properties in his own name, his wife’s name and his childrens’ names so that each of them was in a business doing less than R1m turnover.

Then he was going to register each of the businesses as a micro enterprise and pay turnover tax.

Tax on R999 999 turnover = R14 120 Brilliant!

It doesn’t work because of the anti-avoidance rule in the 6th Schedule of the Income Tax Act.

This says that in order for a person to qualify as a micro business, the turnover of all persons connected to that person must, in total, not exceed R1m. So he should have read the detail before getting excited.

 

 

 

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