BUDGET 2021!
Has it done anything to help Small Business?
Only the most optimistic among us would declare Budget 2021 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?
- R40 billion in planned tax hikes abolished.
- Tax brackets were increased by 5%, so counter bracket creep.
- Company Taxes to be reduced to 27% from 1 April 2022.
- UIF contribution ceiling set at R17 711.58.
The negatives?
- Section 12J tax breaks have been killed.
- Sin Taxes – Excise duties on alcohol & tobacco increased by 8%
- 15c per litre increase in Fuel levy
- 11c per litre increase in Road Accident Fund levy
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 656 601 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 | R587 593 | 0 | 0 | 0 | R587 593 |
| SBC Mix Sal/Tax/Div. | R346 380 | R58 289 | 0 | R98 342 | R503 011 |
| Co. Mix Sal/Tax / Div. | R346 380 | 0 | R154 000 | R79 200 | R579 580 |
| SBC All Dividend | 0 | R58 289 | R309 848 | R257 692 | R625 829 |
| Co. All Dividend | 0 | 0 | R463 848 | R238 551 | R702 399 |
At SME.TAX 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 072 207 4789
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
