Written by: Johann Barnard
The 2015 National Budget speech delivered at the end of February was littered with good news for small businesses. These ranged from tax breaks to the announcement of new procedures when dealing with government for tenders.
The most significant benefit comes in the way of the lowering of Turnover Tax, which is applied to businesses with annual turnover under R1 million.
The finance minister announced that the threshold for 0% tax had been lowered for businesses generating less than R335 000 per year. This has dropped from the previous threshold of R500 000.
The new tax rates and turnover thresholds from 1 April this year are as follows:
|Taxable turnover (R)||Rate of tax||Taxable turnover (R)||Rate of tax|
|0 – 335 000||0%||0 – 150 000||0%|
|335 001 – 500 000||1% of taxable turnover above R335 000||150 001 – 300 000||1% of taxable turnover above R150 000|
|500 001 – 750 000||R1 650 + 2% of taxable turnover above R500 000||300 001 – 500 000||R1 500 + 4% of taxable turnover above 500 000|
|750 001 and above||R6 650 + 3% of taxable turnover above R750 000||500 001 – 750 000||R5 500 + 4% of taxable turnover above R500 000|
|750 001 and above||R15 500 + 6% of taxable turnover above 750 000|
This means that if you – as a sole proprietor, partnership, close corporation, company or co-operative – have turnover of say R600 000, your tax bill will decrease from R29 500 previously to R13 650.
The SA Revenue Service (SARS) will also be establishing small business desks at its revenue offices, which is expected to cut down on the burden for small businesses to be compliant.
Other opportunities have been presented by increases to incentives managed by the Department of Trade and Industry (DTI) for the Manufacturing Competitiveness Enhancement Programme. This would generally be applicable for larger concerns that are expanding their manufacturing capacity.
In either event, it is always useful to see what incentives and grants are available from the DTI.
The other big announcement, certainly for businesses that do or intend to compete for government tenders, is the creation of a central supplier database from April 2015.
This means you only have to register once with this central database that will interface with SARS, the Companies and Intellectual Property Commission and the payroll system. Your tax and BEE status will be verified electronically, cutting down significantly on the administrative hoops you would have to jump through when submitting tender bids.
The interface with the payroll system will presumably also make payment for your goods and services more efficient and within the 30 days that government has committed to paying its suppliers.
Lastly, the minister announced that the new Department of Small Business Development has been allocated R3,5 billion over the next three years for providing mentoring and training support to small businesses. We hope to get some clarity on how this money will be spent and how small business owners can access this support.