Finance Minister Pravin Gordhan has announced tax relief for small businesses and a new small business financing agency is to help fund the sector.
The tax-free threshold for small business corporations will be increased to R63 556, while the 10% rate is reduced to 7% – the threshold up to which this rate is applied is increased to R350 000.
For taxable income above R350 000, the usual 28% corporate tax rate will still apply.
The payment of tax has also been simplified for micro enterprises. From next month qualifying micro-businesses – those that fall within the R1 million turnover limit – will be able to pay turnover tax, VAT and employees’ tax twice a year.
“This means that the number of returns and payments a year will be reduced from 18 to just two,” said Gordhan.
Although Capital Gains Tax (CGT) for companies increased from 50% to 66.6% and for individuals from 25% to 33.3%, the exclusion threshold for the disposal of a small business when a person is over the age of 55 has been increased – from R900 000 to R1.8 million and the maximum market value of assets allowed for a small business disposal for business owners over 55 – has been lifted from R5 million to R10 million.
Gordhan also announced that the consolidation of small business financing into a new subsidiary under the Industrial Development Corporation (IDC) would benefit small firms.
President Jacob Zuma told Parliament earlier this month that the agency was expected to launch in April. – BuaNews