Dear reader

In this week's bulletin:

• Maybe you're just missing out on simple tax systems...
• What IS it?
• Less is more
• Diarise the deadlines

Maybe you’re just missing out on simple tax systems…

My friend, Andrea, has a small business creating and selling flower arrangements to businesses. She imports silk flowers, and then uses them to construct arrangements for fancy-pants businesses in Sandton. They pay her a retainer to swap the arrangements every few weeks.

Andrea’s business makes a turnover of around R50 000 each year. She works for maybe one or two hours a day, from home. But taxes are getting her down. “Sometimes, I wonder if it’s actually worth all the trouble of declaring and submitting taxes,” she says. “There’s so much admin to take care of! And since I’m a new mum, I’m finding it difficult to stay on top of all this stuff”.

I asked her if she was registered for regular tax, or turnover tax. “I’ve heard about turnover tax, but between nappies and flower deliveries, I just haven’t got around to researching that. What is it anyway?”
 

What IS it?

Turnover tax is a relatively new tax (it’s only been available to small businesses in South Africa for about a year). SARS implemented this new tax system to try and reduce the administrative burden on small businesses in South Africa. After all, having to submit tax returns more than once or twice a year, for someone like Andrea, is enough to put them off running their small business, altogether.

With turnover tax, instead of paying income tax, STC, CGT and Vat separately, you only pay turnover tax.

Less is more
To qualify, your business needs to make a turnover of less than R1 million a year, and must have been operating for at least two months. And once you’re on the turnover tax system, you must stay on it for at least three years, unless you exceed the R1 million annual turnover mark.

“It sounds great,” says Andrea. “But do I have to go all the way to the SARS office to register?”
No way! Download the registration form from the SARS website, and fax it to your local office. “It’ll take you ten minutes. But you’ll save time and money — you’ll probably pay less in taxes than you would on the regular tax systems,” I told her.
 

Diarise the deadlines

Just remember to register before 28 February 2010. You snooze, you lose!

Andrea called me today to say that she sent in the application form, and will keep me posted.

That’s the great thing about friends— they make the perfect guinea-pigs for my tax bulletins! And they inspire me to write about their tax problems, and find the solutions. In fact, I’ve decided to put together a new chapter for the Practical Tax Handbook, covering Turnover Tax in detail.
 

Until next week,

Fulvia Becatti

Managing Editor: Practical Tax Handbook and Practical Vat Handbook