Simplifying Recordkeeping for Turnover Tax in South Africa

Turnover tax offers micro businesses in South Africa a simplified approach to meeting their tax obligations, replacing Income Tax, VAT, Provisional Tax, Capital Gains Tax, and Dividends Tax for eligible entities with an annual turnover of R 1 million or less. This system aims to streamline tax compliance, reducing administrative burdens while still ensuring regulatory adherence.

How Turnover Tax Works

Turnover tax is calculated based on a progressive rate structure applied to the taxable turnover of micro businesses:

- Turnover Range and Tax Rates:

• 0 – R 335,000: 0% tax rate

• R 335,001 – R 500,000: 1% of each R1 above R 335,000

• R 500,001 – R 750,000: R 1,650 + 2% of the amount above R 500,000

• R 750,001 and above: R 6,650 + 3% of the amount above R 750,000

Who Qualifies for Turnover Tax?

Micro businesses eligible for turnover tax include:

• Individuals (sole proprietors)

• Partnerships

• Close corporations

• Companies

• Co-operatives

To qualify, businesses must have an annual turnover of R 1 million or less.

Submission Channels

Turnover tax returns can be submitted via:

• Appointment on the SARS eBooking system. No e-filing option is yet available.

• Email submission to SARS.

Payment Schedule

Payments under turnover tax follow a structured timeline:

• First payment: Middle of the tax year, on the last business day of August.

• Second payment: End of the tax year, on the last business day of February.

• Final payment: After submitting the annual TT03 – Turnover Tax Return, aligned with annual income tax returns between July 1 and January 31 of the following year.

Recordkeeping Requirements

One of the key benefits of turnover tax is its reduced recordkeeping demands compared to traditional tax systems. Micro businesses are required to maintain the following records:

1. Income Records: Document all amounts received.

2. Dividends: Keep records of dividends declared.

3. Asset and Liability Records: Maintain a list of assets with a cost price exceeding R10,000 and liabilities exceeding R10,000 at the end of the assessment year.

Conclusion

Turnover tax provides a practical tax solution for micro businesses in South Africa, offering simplified compliance and reduced administrative burdens. By adhering to the prescribed recordkeeping requirements and utilizing recommended workbooks, businesses can efficiently manage their financial affairs while focusing on growth and operational excellence.

For more detailed guidance on turnover tax and recordkeeping practices, businesses are encouraged to consult us at Tax A Sured Pty Ltd you trusted tax professional.