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Your tax and UIF duties

As much as we may grumble, we can’t escape the fact that we have to pay our taxes. However, the tax process can be stressful, with rules that seem complicated and burdensome. Fortunately, SARS has introduced a simpler system called Turnover Tax aimed at helping small businesses streamline the process of paying tax.

Tax experts recommend that you should register with SARS for turnover tax if your business has a turnover of less than R1 million a year. If that sounds like your business, then the first R335,000 of your annual turnover will be tax exempt.  Beyond that level, you can expect to pay 3% of your annual turnover in tax, without having to work out VAT, income tax, provisional tax or capital gains tax.

When to pay?

SARS has introduced a simpler system called Turnover Tax aimed at helping small businesses streamline the process of paying tax.

There are three payment dates. The first payment is on the last business day of August, which will be Thursday, 31 August this year.

The second payment is at the end of the tax year on the last business day of February, which will be Wednesday, 28 February 2018.

The final payment takes place after the tax return is submitted and processed

How much to pay?

Work out your Turnover Tax by applying the following sliding tax rates to your turnover:

0 - R335,000                      0%

R335,001 - R500,000       1% of the amount above 335 000

R500,001 - R750,000       1650 + 2% of the amount above 500 000

R750,001 and above     6 650 + 3% of the amount above 750 000

What records to keep?

The big advantage of turnover tax is that you don’t have to keep nearly as many records. In fact, for a cash-based small business, there are only three types of record that you have to keep track of:

  • All amounts received
  • Assets with a cost price of more than R10,000 at the end of the year of assessment
  • Liabilities exceeding R10,000.

You can download a record-keeping workbook from the SARS website: http://www.sars.gov.za/TaxTypes/TT/Pages/default.aspx

The responsibilities of an employer

Apart from doing our duty as tax-paying citizens, we also have to look after our workers. For small businesses, this means making a contribution to the Unemployment Insurance Fund (UIF). It’s important, because the UIF provides workers with financial relief if, for some reason, they lose their jobs or are unable to work because of maternity, adoption leave, or illness. If a worker dies, UIF also provides their dependants with assistance.

Employers have to register themselves and their workers with the UIF and pay their contributions every month.

How it works is that the employer deducts 1% of a worker’s salary and pays it on their behalf to the UIF every month. The employer also makes a contribution of 1%. In other words, the UIF has to receive 2% of the value of the worker’s salary every month. The worker pays half, the employer pays the other half, but it is the employer, not the worker, who is required to actually transfer the funds to the UIF.

Workers have to be registered as soon as they are employed. The Department of Labour states that only the following workers are not subject to UIF:

  •         Workers working less than 24 hours a month for an employer
  •         Learners
  •         Public servants
  •         Foreigners working on contract
  •         Workers who get a monthly State (old age) pension
  •         Workers who only earn commission.

UIF has to be paid within seven days after the end of the month. Payments can be made by means of eFiling, electronic payments through the Internet (EFT), or at an approved banking institution.

Find out more at the SARS website: http://www.sars.gov.za/TaxTypes/UIF/Pages/default.aspx