BUDGET 2022

Has it helped Small Businesses?

Only the most optimistic among us would declare Budget 2022 a Small Business-friendly budget! There are however those who make the point that it could have been worse, so maybe we should celebrate nonetheless.

So, what are the positives?

• Net tax relief of R5.2bn for 2023.
• Tax brackets were increased by 4.5%, so counter bracket creep.
• Company Taxes reduced to 27% from 1 April 2022.
• Tax as a % per litre of fuel falls from 41% to 34%.

The negatives? 

• Sin Taxes – Excise duties on alcohol & tobacco increased by 8%
• R144 per ton increase in Carbon Tax
• Plastic Bag levy increased to 28c
• Incandescent light bulb levy increased to R15

Despite the pro small business rhetoric from Government, the clear facts are that business ownership for all entrepreneurs is going to carry more “penalties” and encounter more red tape than many might think the risks warrant!

So how can these “penalties” be mitigated? 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, may you ask?

The table below illustrates the different outcomes on R1 731 601 million profit and shows that being an SBC is still clearly the best option.

Income Type	PAYE	SBC Tax	Co Tax	Div. Tax	Total Paid
All Salary	R614 192	0	0	0	R614 192
SBC Mix Sal/Tax/Div.	R388 692	R58 013	0	R98 398	R545 103
Co. Mix Sal/Tax / Div.	R388 692	0	R148 500	R80 300	R617 492
SBC All Dividend	0	R58 013	R319 032	R270 911	R647 956
Co. All Dividend	0	0	R467 532	R252 814	R720 346

Our Services:

At SME.TAX we do more than just assist clients with their provisional taxes.

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 www.sme.tax or give us a call on 072 207 4789