‘For the brave and ambitious making a loss in your business is not a bad thing. That’s if you want to avoid paying tax.
This is what we learnt at the Ort Tax workshop on Tuesday morning. Emarentia Ngema from the South African Revenue Service (SARS) whipped through the tax implications as they applied to sole proprietors and small business owners.
SARS has the intention to encourage small business having recognised that it is vital player in the informal economy, and when added together, contributes to job creation with two to three people per business. SARS will hold your losses (ie you have no tax obligation) until your company makes a profit and then your profit is deducted from your earlier losses. You end up paying tax on a much smaller amount.
For the individual providing a personal service, your first R75 000 of income is tax free, below the age of R65 and from age 65 to 7 the threshold is R116 150.
An SBC is a new tax incentive, not a business structure, derived from a combination of dividend, rental, interest income and royalties (investment) or a saleable skill such as accounting, translation or engineering among others (personal). An SBC is taxed at the lowest rate, for example on income of R310 000 a sole proprietor will pay R46 060 while an SBC pay just R16 450 on the same income.
If you receive income from multiple sources, you will be taxed on turnover with 0% tax applicable on the first R335000.’
– Iza Grek is an award-winning freelance writer based in Johannesburg. She has more than 15 years’ experience across a broad spectrum of industries.
p: 0728736061
w: www.awordor2.org
e: iza@awordor2.org
Watch the ORT JET SARS session with Emarentia Ngema, SARS Branch Operations Engagement, in under 2 minutes! Click here for our Facebook page or to watch on YOUTUBE.
“Thank you ORT JET for the wonderful work you do for the community and for the effective and concise talk” – Aubrey Goldsmith
“A great session and effective in helping me learn” – Gerald Lilian
“We all experience similar issues and struggles and the SARS talk was insightful with excellent group work” – Natalie Gonen
“Extremely insightful and easy going. Great support for small businesses from SARS” – Luyanda Bambisa
“Emarentia was exceptionally knowledgeably and spoke off the cuff. Every question was answered perfectly” – Nadine Meyerowitz
“The discussion was useful and interesting” – Linette Maree