Turnover Tax
7.1 Introduction
Turnover tax is a simplified system of taxation that was introduced to substitute income tax,
CGT, dividends tax (partially) and VAT. This system of taxation applies to all businesses who
qualify as a micro business. This study unit is going discuss the requirements to qualify as a
micro business, the calculation of taxable turnover, turnover tax rates, the requirements for
registration and deregistration of turnover tax, and lastly, how turnover tax is administered.
, 7.2 Micro business
Any natural person, company or close corporation with qualifying turnover that does not
exceed R1 million may elect to be taxed on the turnover tax system. However, this does not
include persons specifically disqualified to register as a micro business.
7.2.1 Qualifying turnover
This refers to receipts of a business during a year of assessment from carrying on trade. The
receipts exclude the following amounts:
Receipts of capital nature;
Certain Government grants; and
Amounts received from small business funding entities.
If a taxpayer carried on trade for a period less than 12 months, the threshold of R1 million is
proportionated according to the number of full months the taxpayer carried on a trade.
7.2.2 Persons specifically excluded and disqualified as micro businesses
The following is a list of persons specifically excluded and disqualified to be micro business:
A person who, at any time during the year of assessment, holds shares or interests in a
private company, close corporation or co-operative
A person for whom more than 20% of total receipts consists of investment income and
professional income
A person who is a personal service provider or labour broker
A person receiving capital receipts in excess of R1,5 million over three years
A person who is a partner in a partnership where:
Any of the partners is not a natural person; or
A person is a partner in more than one partnership; or
The qualifying turnover of that partnership exceeds R1 million
Certain companies, close corporations and co-operatives in the following circumstances
Where the company, close corporation or co-operative is:
A public benefit organisation; or
Association approved by the Commissioner; or
A small business funding entity approved by the Commissioner; or
The shareholder in that business is not a natural person or
7.1 Introduction
Turnover tax is a simplified system of taxation that was introduced to substitute income tax,
CGT, dividends tax (partially) and VAT. This system of taxation applies to all businesses who
qualify as a micro business. This study unit is going discuss the requirements to qualify as a
micro business, the calculation of taxable turnover, turnover tax rates, the requirements for
registration and deregistration of turnover tax, and lastly, how turnover tax is administered.
, 7.2 Micro business
Any natural person, company or close corporation with qualifying turnover that does not
exceed R1 million may elect to be taxed on the turnover tax system. However, this does not
include persons specifically disqualified to register as a micro business.
7.2.1 Qualifying turnover
This refers to receipts of a business during a year of assessment from carrying on trade. The
receipts exclude the following amounts:
Receipts of capital nature;
Certain Government grants; and
Amounts received from small business funding entities.
If a taxpayer carried on trade for a period less than 12 months, the threshold of R1 million is
proportionated according to the number of full months the taxpayer carried on a trade.
7.2.2 Persons specifically excluded and disqualified as micro businesses
The following is a list of persons specifically excluded and disqualified to be micro business:
A person who, at any time during the year of assessment, holds shares or interests in a
private company, close corporation or co-operative
A person for whom more than 20% of total receipts consists of investment income and
professional income
A person who is a personal service provider or labour broker
A person receiving capital receipts in excess of R1,5 million over three years
A person who is a partner in a partnership where:
Any of the partners is not a natural person; or
A person is a partner in more than one partnership; or
The qualifying turnover of that partnership exceeds R1 million
Certain companies, close corporations and co-operatives in the following circumstances
Where the company, close corporation or co-operative is:
A public benefit organisation; or
Association approved by the Commissioner; or
A small business funding entity approved by the Commissioner; or
The shareholder in that business is not a natural person or
