SARS column continues its focus on Small, Micro or Medium Enterprises (SMMEs)
In the latest SARS column it continues to focus on Small, Micro or Medium Enterprises (SMMEs).
The following is a useful table looking at the various types of businesses and their tax responsibilities:
| Types of business | Description | Tax responsibilities |
| Sole Trader/Owner | Operates on a small scale and run by self-employed individuals. Includes informal businesses. No requirement to register with Company and Intellectual Property Commission (CIPC). | Register for Personal Income Tax (PIT) and annually declare your business income on the Income Tax Return for Individuals (ITR12). If you need to pay SARS, you must do so before the payment deadline reflected on your Notice of Assessment (ITA34). |
| Partnership | Two or more people with a common interest who join to run a business. No requirement to register with CIPC. Each partner will be taxed separately according to their share in the business. | Register for Personal Income Tax (PIT) and annually declare your business income on the Income Tax Return for Individuals (ITR12). If you need to pay SARS, you must do so before the payment deadline reflected on your Notice of Assessment (ITA34). |
| Private/Public Companies or Close Corporation | Formal business that is required to register with CIPC and obtain a company registration number. The company is separate from the owner and the owner is required to submit a Personal Income Tax Return (ITR12). | · Automatic registration for Corporate Income Tax (CIT) when registering with CIPC and declare CIT annually on ITR14 · Register for Value Added Tax (VAT) – if you qualify · Register for Pay As You Earn (PAYE) – if you qualify and Special Small Business taxes: Turnover Tax, SBC or ETI. · Payment of taxes |
| Co-operatives | A Co-operative is formed when a group of people, with common interests, joins to achieve a certain economic, social or cultural goal, such as a stokvel, community agricultural venture, etc. A Co-operative is required to register with CIPC. Cooperatives are taxed as companies. | See Private/Public Companies or Close Corporations |
Special taxes applicable to small businesses
There are a number of tax incentives available to qualifying small businesses like the Turnover Tax (TOT), Small Business Corporation Taxes (SBC) and Employment Tax Incentive (ETI).
Turnover Tax (TOT)
Turnover Tax aims to reduce and simplify tax compliance and the administrative burden on small businesses with an annual turnover of R1 million or less. The Turnover Tax system is a single tax system and replaces Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax. Qualifying businesses will declare and pay one (1) tax (unless with a VAT or PAYE option) and only start paying tax when their annual turnover exceeds R335 000. Note: A small business that is registered for Turnover Tax can choose to register for VAT as well.
Small Business Corporation (SBC)
Small businesses with an annual turnover of up to R20 million may qualify to pay Income Tax at a reduced tax rate. If you indicate that you are a small business on your Income Tax Return (ITR14), and meet all the requirements, the reduced rates will be applied automatically. There is no need to apply for the reduced rates because your SBC status will be determined using information on your ITR14.
Employment Tax Incentive (ETI)
The ETI is an incentive aimed at encouraging employers to hire young work seekers. It was implemented with effect from 1 January 2014. For more information on this, search under “ETI” on the SARS website
Tax Return submission periods per tax type
| Tax type | Submission frequency | Tax Form | Notes |
| Company Income Tax (CIT) | Once a year as per company’s financial year end | ITR14 | The company has 12 months to submit the ITR14 after the financial year-end. The financial year end is indicated on the company registration certificate from CIPC |
| Personal Income Tax (for self-employed individuals) | Once a year as announced by SARS during filing season | ITR12 | Sole traders, self-employed and individuals in a partnership should declare their business income on their ITR12 |
| VAT | Every two (2) months before the 25th | VAT201 | The period will be allocated at registration and some companies may be required to submit every month |
| PAYE | Monthly on or before the 7th | EMP201 | The submission is due within seven days after the month the tax was deducted from the employee. |
| Provisional Tax | Twice a year | IRP6 | For companies: The first submission is due six months from the start of the financial year. The second submission is due at the end of your financial year. For individuals: the first submission is due on 30 August and second submission is due 28/9 February of each year. |
| Turnover Tax | Once a year | TT03 | The submission of turnover tax returns is done once a year in line with the company’s financial year-end or submission of the annual income tax returns, between 1 July and 31 January of the following year for individuals. |
| Employee reconciliation | End of October and end of May | EMP501 | First interim submission is due end of October and final submission end of May |
For more information on your tax responsibilities and how to be tax compliant, visit the website and click on the small business link.
Regional News
- Employer Filing Season: Employer filing season will commence on April 1 and end on May 31, 2021. All employers who are registered for PAYE will need to submit their EMP501 (PAYE Reconciliations with IRP5 certificates issued to employees) during the Employer filing season. Employers should note the following:
- The EMP501 can be submitted via eFiling, or easyfile for employers with more than 50 employees
- Certificates must be issued to employees ONLY after they have been submitted to SARS and accepted by SARS
- Failure to submit these certificates to SARS can result in severe penalties for employers and will disadvantage your employees who try to submit their personal income tax returns.
- Focus on Registered Employers: The Gauteng South region will be focusing on employers within the region for the first six months of the new financial year, starting on April 1 2021. A special task team has been set up to:
- Assist compliant taxpayers with the submission of reconciliations during the Employer filing season
- Engage employers with outstanding PAYE returns and assist them to comply
- Focus on employers who have failed to pay over the PAYE withheld from their employees. Harsh action is planned against those who are non-compliant. PAYE is not a tax on the employer and the employer holds the money in trust for SARS
- Some visits to the workplaces are being planned to interview employees where non-compliance is detected.
If you are registered for any payroll taxes, please ensure your tax affairs are in order before we need to contact you.
- Taxpayers can now request their Tax Compliance Status (TCS) via a link on the SARS website landing page, without having to log in to eFiling. All you need is your Tax Reference number!
