Turnover tax is a simplified system aimed at making it easier for micro business to meet their tax obligations and is for micro business with turnover below R1 million. This tax system replaces Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax.
A big advantage of turnover tax is the reduced record-keeping requirements.
The following taxpayers may qualify for turnover tax:
- Individuals (sole proprietors)
- Partnerships
- Close corporations
- Companies
- Co-operatives
Turnover tax is calculated by applying a tax rate according to the turnover tax table of a micro business. The Tax rate is between 0% and 3% for turnover from R0 to R 999 999.
- A natural person or company may be excluded from the Turnover Tax regime if:
- the shares are held in an unlisted company;
- more than 20% of the receipts are derived from rendering a professional service;
- the taxpayer is a personal service provider or a labour broker;
- if the company’s financial year end is not on 28 February
- if the any of the company’s shareholders is not a natural person.
To register do the Quick test for individuals and companies to determine if a business meets the criteria to qualify for turnover tax registration. Complete a TT01 application form (Manual or online) if you qualify.
Application for registration should be sent before the beginning of the year of assessment or a later date that may be determined by the Commissioner in a Government Notice.
New businesses: If trading start during a year of assessment, an application must be sent within 2 months from the date that the business started.
Existing businesses: Registration or switch to turnover tax must be done before the start of a new tax year.
Turnover Tax returns are submitted through two channels:
- Make an appointment on our eBooking system.
- Or email SARS: For Tax Practitioners: pcc@sars.gov.za/For Taxpayers: contactus@sars.gov.za
Three Payment dates:
- 1st payment is in the middle of the tax year on the last business day of August i.e. 29 August 2014 on the TT02 – Payment Advice for Turnover Tax
- 2nd payment is at the end of the tax year on the last business day of February i.e. 27 February 2015 on the TT02 – Payment Advice for Turnover Tax
- Final payment is after the annual TT03 – Turnover Tax Return is submitted and processed. The submission of TT03 turnover tax returns is in line with the submission of the annual income tax returns, between 1 July and 31 January of the following year.
Interest and penalties Should a small business fail to pay any Turnover Tax when it is payable to SARS, interest will be charged.
Records to keep:
- Records of all amounts received(not capital goods) during the tax year from business in South Africa;
- Records of dividends declared;
- A list of each asset and liability with a cost price of more than R10,000 at the end of the tax year.
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.
Deregistration
- Voluntary deregistration: 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.
- Compulsory deregistration: Forced deregister if turnover exceeds R1million for a given tax year or certain qualifying criteria are no longer met. The business will be deregistered from the beginning of the month following the month during which they no longer qualify for turnover tax
Important to remember if a person has been deregistered (voluntary of compulsory) from turnover tax, they will not be allowed to register as a micro business again.
Find out more by attending our Facebook Live event.
Facebook Live
- Friday, 6 October 2023
- Access the Facebook Live event recording
- Presenters Daleen Groen and Annarien Nel
In the event that you have more complex tax matters, or any other queries related to turnover tax, please contact our offices for assistance.
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Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.