Tax relief, funding for small business
23 February 2012
Delivering his National Budget speech in Parliament in Cape Town on Wednesday, Finance Minister Pravin Gordhan announced both some tax relief for small business and a new financing agency to improve funding for 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 was 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 said 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.