2018 TAX SEASON – OFFICIALLY OPEN FOR BUSINESS!
The 2018 tax filing season opened on 1 July 2018 and will close almost a month earlier on 31 October 2018 (for e-Filing clients). As quick as you can, get the following information to your tax [...]
Only the most optimistic among us would declare Budget 2017 a Small Business friendly budget!
There are however those who make the point that it could have been worse, so maybe we should celebrate none the less.
So, what are the positives?
- VAT as many speculated, did not increase.
- Company Taxes remained the same
- R3,9 billion allocated for SMME’s and Cooperatives over the next 3 years
The negatives?
- Limited bracket creep to take into account inflation
- Dividend withholding tax increased to 20{a87fdf049d1ab93073cc4529e6637aafdc037c90a3a9dc13375d149f4a1ddf2f}
- New super Tax bracket of 40{a87fdf049d1ab93073cc4529e6637aafdc037c90a3a9dc13375d149f4a1ddf2f} for those earning more than R1,5 million per annum
- 30c per litre increase in Fuel levy
- 9c per litre increase in Road Accident Fund levy
Despite the pro small business leaning of the budget speech, the clear facts are that business ownership for all entrepreneurs is going to carry more “penalties” than many might think the risks warrant!
So how can these penalties be mitigates? The best way, is to ensure your business qualifies as a small business corporation (SBC) as this still allows for a little breathing room from the new tax increases.
How, you may ask?
The table below illustrates the different outcomes on R1,5 million profit and shows that being an SBC is clearly the best option.
| Income Type | PAYE | SBC Tax | Co Tax | Dividend Tax | Total Paid |
| All Salary | R533 625 | 0 | 0 | 0 | R533 625 |
| SBC Mix Sal / Tax / Div. | R308 124 | R59 098 | 0 | R98 180 | R465 402 |
| Co. Mix Sal / Tax / Div. | R308 124 | 0 | R154 000 | R79 200 | R541 324 |
| SBC All Dividend | 0 | R59 098 | R266 000 | R234 980 | R560 078 |
| Co. All Dividend | 0 | 0 | R420 000 | R216 000 | R636 000 |
At Phezulu VBO we do more than just assist clients with tax planning, we are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.
For more information, please visit our website or give us a call on 010 003 8558
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