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tax guide for small businesses
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- University Of South Africa (Unisa)
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Income TaxTax Guide for Small Businesses
2018/19
, Tax Guide for Small Businesses 2018/2019
Preface
This guide is a general guide dealing with the taxation of small businesses.
This guide is not an “official publication” as defined in section 1 of the Tax Administration
Act 28 of 2011 and accordingly does not create a practice generally prevailing under
section 5 of that Act. It should, therefore, not be used as a legal reference. It is also not a
binding general ruling under section 89 of Chapter 7 of the Tax Administration Act.
Should an advance tax ruling be required, visit the SARS website for details of the
application procedure.
The information in this guide concerning income tax relates to –
• natural persons for the 2019 year of assessment commencing on 1 March 2018 and
ending on 28 February 2019;
• trusts in respect of years of assessment commencing and ending during the period
commencing on 1 March 2018 and ending on 28 February 2019; and
• companies and CCs with years of assessment ending during the 12-month period
ending on 31 March 2019.
While care has been taken in the preparation of this document to ensure that the information
and the rates published are correct at the date of publication, errors may occur. Should there
be any doubt it would be advisable for users to verify the rates with the relevant legislation
pertaining to that rate, applicable to the tax, customs or excise concerned.
For income tax purposes, this guide has been updated to include the Tax Administration
Laws Amendment Act 22 of 2018, the Taxation Laws Amendment Act 23 of 2018 and the
Rates and Monetary Amounts and Amendment of Revenue Laws Act 21 of 2018 as well as
the Budget Review of 2018.
For indirect tax purposes, all information has been updated to include amendments up to the
date of the publication of this guide.
Should you require additional information concerning any aspect of taxation, you may –
• visit the SARS website at www.sars.gov.za;
• visit your nearest SARS branch;
• contact your own tax advisor or tax practitioner; or
• contact the SARS National Contact Centre –
if calling locally, on 0800 00 7277; or
if calling from abroad, on +27 11 602 2093 (only between 8am and 4pm
South Africa time).
All guides, interpretation notes, brochures, forms, returns and tables referred to in this guide
are available on the SARS website. Unless indicated otherwise, the latest issue of these
documents should be consulted.
Tax Guide for Small Businesses 2018/2019 i
,Comments or suggestions on this guide may be sent to policycomments@sars.gov.za.
Prepared by
Legal Counsel
SOUTH AFRICAN REVENUE SERVICE
Date of 1st issue : November 2008
Date of 2nd issue : December 2009
Date of 3rd issue : February 2011
Date of 4th issue : November 2013
Date of 5th issue : 24 March 2014
Date of 6th issue : 27 March 2015
Date of 7th issue : 10 March 2017
Date of 8th issue : 8 November 2017
Date of 9th issue : 30 January 2019
Date of 10th issue : 7 August 2019
Tax Guide for Small Businesses 2018/2019 ii
, Contents
Preface ................................................................................................................................... i
Glossary ............................................................................................................................... 1
1. Overview ................................................................................................................... 2
2. General characteristics of different types of business .......................................... 2
2.1 Introduction ........................................................................................................................... 2
2.1.1 Sole proprietorship ...................................................................................................................... 2
2.1.2 Partnership .................................................................................................................................. 3
2.1.3 Close corporation ........................................................................................................................ 4
2.1.4 Private company ......................................................................................................................... 4
2.1.5 Co-operative ................................................................................................................................ 4
2.1.6 Other types of business entities as described in the Act ............................................................ 5
(a) Small business corporation ......................................................................................................... 5
(b) Micro business (turnover tax) ...................................................................................................... 5
(c) Personal service provider............................................................................................................ 5
(d) Labour broker .............................................................................................................................. 6
(e) Independent contractor ............................................................................................................... 7
(f) Small, medium and micro enterprises ......................................................................................... 7
3. A business and the South African Revenue Service ............................................. 7
3.1 Introduction ........................................................................................................................... 7
3.2 Income tax ............................................................................................................................. 8
3.2.1 General........................................................................................................................................ 8
3.2.2 Registration ................................................................................................................................. 8
3.2.3 Change of address ...................................................................................................................... 8
3.2.4 Year of assessment and filing of income tax returns .................................................................. 8
3.2.5 eFiling and SARS MobiApp ........................................................................................................ 9
3.2.6 Payments at banks.................................................................................................................... 10
3.2.7 Electronic funds transfer ........................................................................................................... 10
3.2.8 Provisional tax (the Fourth Schedule) ....................................................................................... 10
3.2.9 Employees’ tax (PAYE) (the Fourth Schedule) ......................................................................... 10
3.2.10 How to determine net profit or loss of a business ..................................................................... 11
3.2.11 Comparative profit or loss statements ...................................................................................... 13
3.2.12 Connection between “net profit” and “taxable income” ............................................................. 14
3.2.13 Determination of taxable income or assessed loss .................................................................. 14
3.2.14 General deduction formula ........................................................................................................ 15
3.2.15 Tax rates ................................................................................................................................... 15
(a) Taxable income (excluding any retirement fund lump sum benefit, retirement fund lump
sum withdrawal benefit or severance benefit) of any natural person, deceased estate,
insolvent estate or special trust ................................................................................................. 15
(b) Taxable income of trusts (other than special trusts or public benefit organisations,
recreational clubs or small business funding entities that are trusts) ....................................... 17
(c) Taxable income of companies .................................................................................................. 18
3.2.16 Special allowances or deductions and recoupment.................................................................. 19
(a) Industrial buildings (buildings used in a process of manufacture or a process of a similar
nature) (section 13) ................................................................................................................... 20
(b) Buildings used by hotel keepers (section 13bis) ....................................................................... 20
(c) Urban development zones (section 13quat) ............................................................................. 21
(d) Commercial buildings (section 13quin) ..................................................................................... 21
(e) Certain residential units (section 13sex) ................................................................................... 21
(f) Residential buildings (section 13ter) ......................................................................................... 22
(g) Aircraft and ships (section 12C) ................................................................................................ 23
(h) Rolling stock (trains and carriages) (section 12DA) .................................................................. 23
(i) Certain pipelines, transmission lines and railway lines (section 12D) ...................................... 23
(j) Airport assets (section 12F) ...................................................................................................... 24
(k) Port assets (section 12F) .......................................................................................................... 25
(l) Machinery, plant, implements, utensils and articles [section 11(e)] ......................................... 25
(m) Manufacturing assets (section 12C) ......................................................................................... 26
(n) Plant or machinery of small business corporations (section 12E) ............................................ 27
Tax Guide for Small Businesses 2018/2019 iii
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