Dear fellow taxpayer

Welcome to this week’s Tax Bulletin!

Over the last week, I’ve had so many queries about the new presumptive turnover tax system, with many subscribers wanting to know if they qualify for it and, if so, how to convert to it.

Well, the simplest way to determine who qualifies for the new system is to go through the checklist below.

Remember, if you answer NO to any of these questions, your business WILL NOT qualify for the turnover tax:

• Will your business’ total income (turnover) be less than or equal to R1 million for the year of assessment?
• Do you declare that the business isn’t registered for Vat or that it has applied to be deregistered for VAT?
• Do you declare that the business doesn’t render a “professional service” (e.g. accountants, consultants, lawyers etc)?
• Do you declare that the business is not a “personal service provider” or a “labour broker” without a SARS exemption certificate?      
• Does the business trade in one of the following forms: sole proprietor, partnership, close corporation, company, or cooperative?
• If the business is a partnership, do you declare that you aren’t a partner in another partnership?
• If the business is a close corporation, company, or cooperative, do you declare that all of the shareholders/members are individuals?
• Do you declare that the business isn’t a “public benefit organisation” or a “recreational club”?
• Does the business’ year of assessment run from the beginning of March to the end of February of the following year?
• Do you declare that the owner and/or the business don’t hold shares/interests in another close corporation, company, or cooperative?
• Do you declare that the business’ investment income (e.g. interest, dividends etc) isn’t expected to exceed 10% of the total income of the business?
• Do you declare that the income from the disposal of assets by the business over the past two years of assessment didn’t exceed R1.5 million in total?  
• Do you declare that the business wasn’t registered for the turnover tax for any of the last three years of assessment?
• If the business is a partnership, do you declare that all the partners are individuals?    

If you answered YES to all these questions, you are well on your way to registering for the turnover tax.

As for where to register, simply go to your nearest SARS branch. The application forms should have been up on SARS’ website this week but SARS says they’re experiencing “technical difficulties”. Hopefully, the forms will be up by the end of the week!

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Mailbox
Answered by Matsika Vengesa of Tax Consulting SA

We have 3 separate businesses...do we qualify for turnover tax?

Dear Matsika,

My husband has three businesses which are run as sole proprietors. We are splitting them into three separate bank accounts and financials as of the 2010 tax year i.e. 1 March 2009. Separately each makes under R1 million turnover. One business is retail, one printing and the other is manufacturing.

As they are all run as sole proprietors, is it possible to go onto the turnover tax basis?

Answer:

Where a person trades in different types of businesses, the total turnover of all business activities will be taken into account for purposes of determining the R1 million cap. In other words, for your husband to use the turnover tax regime, the sum of all the income from the three businesses must not exceed R1 million.
 
Until next week.
 
Regards
 
Nothando Hlatshwayo

Managing Editor
The Practical Tax Handbook
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