Only the most optimistic among us would declare Budget 2020 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.
- The “One Off” Corruption Tax wasn’t implemented
- Company Taxes remained the same
- Public Servants wage bill to be cut by R160 Billion over the next 3 years
- Limited bracket creep to take into account inflation
- Expat tax is real – threshold increased to R1.25 million
- 16c 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 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, you may ask?
The table below illustrates the different outcomes on R1 577 301 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||R559 464||0||0||0||R559 464|
|SBC Mix Sal/Tax/Div.||R333 964||R58 583||0||R98 283||R490 830|
|Co. Mix Sal/Tax / Div.||R333 964||0||R154 000||R79 200||R567 164|
|SBC All Dividend||0||R58 583||R287 644||R246 215||R592 442|
|Co. All Dividend||0||0||R441 644||R227 131||R668 775|
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 087 238 4357