Every year, the Minister of Finance adjusts the aspects affecting the taxable liability of both persons and businesses.
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- Personal income tax increases by 1% across all tax brackets, and the maximum rate will rise to 41%.
- There is a sharp drop in the Micro Businesses Turnover Tax with the maximum rate falling from 6% to 3%. This is a significant concession to small business.
- Transfer duty rates have been increased by 3% over last years figures, and are reflected as follows:
Value (Rand) Rate
|0 – 750 000||0%|
|750 001 – 1 250 000|| 3% on the value above 750 000|
|1 250 001 – 1 750 000|| 15 000 + 6% of the value above 1 250 000|
|1 750 001 – 2 250 000|| 45 000 + 8% of the amount above 1 750 000|
| 2 250 001 and above||85 000 + 11% of the amount above 2 250 000|
- Therefore, any property worth R 750 000 and less will not be taxed on transfer. These rates are effective as of 1 March 2015 and apply to all persons (including Companies, Close Corporations and Trusts).
- As such buyers buying for under R2 250 000 will enjoy more favourable rates and buying property may be more accessible to purchasers generally.
Personal Income tax:
The increase in income tax will naturally have adverse effects on high-income earners.
In the case of business owners, it is therefore of the utmost importance (now more than before) that high-income earners structure their remuneration packages with care and in the most tax efficient and legally responsible way possible.
This is particularly important when it comes to employee share schemes, often applied in BBBEE transactions. In these instances, employees are afforded the opportunity to buy into the company they work for and often by way of set off from services rendered or as a non-cash bonus, pay for said shares.
This means that the value of the shares attributed to the employee concerned will be taxed as a fringe benefit. Therefore, the inclusion of fringe benefit tax will increase the employee’s income tax liability.
Therefore, these transactions, amongst others, should be carefully planned and structured before implementation.
Micro Businesses Turnover Tax (Small Business):
Qualifying small businesses may register and take advantage of the small business tax incentives.
Broadly speaking, micro businesses, or SMME’s with an annual turnover of R 1 million or less are accordingly defined by SARS as:
- Individuals (sole proprietors)
- Close corporations
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According to SARS, turnover tax is a simplified system aimed at making it easier for 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.
This as such is a very advantageous system for small businesses.