Discover how to Register with SARS for tax relief as a small business.
From the 2000 tax year special tax rates were introduced for any company that qualifies as a Small business corporation (‘SBC’). This was done to provide some tax relief thereby promoting the growth and prosperity of certain smaller companies. In terms of S12E a company will qualify as a SBC if is is a close corporation or a company registered as a private company ((Pty) ltd.) in terms of the Companies Act and:
1. All shareholders throughout the year of assessment are natural persons (residing in SA), who hold on shares in any other private companies or members interest in any other close corporation.
Other than certain ‘permitted shareholdings’, the most notable of which is:
- A venture capital company as per s 12 of the act
- A dormant company, close corporation, or co-operative which has not during any year of assessment carried on a trade and owned assets exceeding R5,000.00 in value.
- Any company or close corporation if it has taken steps to liquidate, wind up or deregister.
2. The gross income for the year of assessment does not exceed R20 million (prior to 1 April 2013: R14 million)
3. Not more than 20% of revenue receipts plus accruals plus capital gains consists collectively of investment income and income from rendering a personal service:
| Personal Service | Investment Income |
|---|---|
| Includes any service in the fields of accounting, actuarial science, architecture, auctioning, auditing, broadcasting, consulting, draftsmanship, education, engineering, financial service broking, health, information technology, journalism, law, management, real estate broking, research, sport, surveying, translation, valuation or veterinary services which is performed personally by any person who holds an interest in the company except where such company employs three or more unconnected full-time employees for core operations, throughout the year of assessment. | Includes any annuity, interest, rental income, royalty or any income of a similar nature, as well as dividends and any proceeds derived from investment or trading in financial instruments or immovable property. |
Note that income is only from a personal service if both of the following apply:
- The service is performed personally by a shareholder or member; and
- The company or close corporation does not employ three or more full time independent employees throughout the year of assessment
To register with SARS for turnover tax, simply follow these steps: https://www.sars.gov.za/types-of-tax/turnover-tax/how-to-register/
Small Business Corporations (SBC)
23 February 2022 – See changes from last year:
Years of assessment ending on or after 31 March 2023:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 1 – 91 250 | 0% of taxable income |
| 91 251 – 365 000 | 7% of taxable income above 91 250 |
| 365 001 – 550 000 | 19 163 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 013 + 27% of the amount above 550 000 |
Years of assessment ending on any date between 1 April 2022 and 30 March 2023:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 1 – 91 250 | 0% of taxable income |
| 91 251 – 365 000 | 7% of taxable income above 91 250 |
| 365 001 – 550 000 | 19 163 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 013 + 28% of the amount above 550 000 |
Financial years ending on any date between 1 April 2021 and 31 March 2022:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 1 – 87 300 | 0% of taxable income |
| 87 301 – 365 000 | 7% of taxable income above 87 300 |
| 365 001 – 550 000 | 19 439 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 289 + 28% of the amount above 550 000 |
Financial years ending on any date between 1 April 2020 and 31 March 2021:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 1 – 83 100 | 0% of taxable income |
| 83 101 – 365 000 | 7% of taxable income above 83 100 |
| 365 001 – 550 000 | 19 733 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 583 + 28% of the amount above 550 000 |
Financial years ending on any date between 1 April 2019 and 31 March 2020:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 0 – 79 000 | 0% of taxable income |
| 79 001 – 365 000 | 7% of taxable income above 79 000 |
| 365 001 – 550 000 | 20 020 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 870 + 28% of the amount above 550 000 |
Financial years ending on any date between 1 April 2018 and 31 March 2019:
| Taxable Income (R) | Rate of Tax (R) |
|---|---|
| 0 – 78 150 | 0% of taxable income |
| 78 151 – 365 000 | 7% of taxable income above 78 150 |
| 365 001 – 550 000 | 20 080 + 21% of taxable income above 365 000 |
| 550 001 and above | 58 930 + 28% of the amount above 550 000 |
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