Small business corporations and turnover tax - What does the future hold?

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* 1. Are you aware of the proposed changes to the Small Business Corporation (SBC) Regime and the Turnover Tax (TT) regime mentioned in the 2014 Budget?

Yes

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* 2. Do any of your clients currently use the SBC regime?

Yes

Unsure

If yes, how many?

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* 3. If you answered no to question 2 above, what is the reason for this?

I wasn’t aware of this regime.

They don’t qualify.

The tax benefit of the SBC regime is not worth the effort.

Other – please specify.

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* 4. Do any of your clients currently use the TT regime?

Yes

If yes, how many?

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* 5. If you answered no to question 4 above, what is the reason for this?

I wasn’t aware of this regime.

They don’t qualify.

They would have paid more tax than on the normal or SBC tax regime.

Other (please specify)

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* 6. Are any of your clients that have a turnover of R1 million or less, on the SBC regime rather than on the TT regime?

Yes

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* 7. If you answered yes to question 6 above, why did they chose the SBC regime rather than the TT regime?

They pay less tax on the SBC regime than on the TT regime (eg. if the company is in a loss position).

The SBC regime is simpler to understand and administer.

They don’t qualify for the TT regime (entrance requirements other than turnover not met) – please specify which requirement/s.

All of the above.

Other (please specify)

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* 8. Do you know of any current concerns your clients are facing regarding the:

SBC regime?

TT regime?

Please elaborate

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* 9. Would you support a reform of the TT regime that entails reducing the tax rates for micro businesses?

Yes

If no, why?

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* 10. Would you support the replacement of the SBC regime with a refundable tax compliance credit? A refundable tax compliance credit would basically entail receiving a credit against your final tax liability (that is it would reduce the tax that you need to pay), or alternatively you would get cash paid back to you if you are in an assessed loss position. The purpose of the credit would be to compensate the business for the tax compliance costs that it has to incur.

Yes

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* 11. What amount received as a refundable tax compliance credit would justify a business switching from the SBC regime to a refundable tax compliance credit only (ie. The business would now have to pay tax at 28% rather than the reduced rates per the SBC tax tables, it would no longer qualify for the accelerated capital allowances but it would receive a tax compliance credit that it can set off against its tax liability or alternatively it would receive the cash if the business is in a tax loss situation)?

R10 000

R12 000

R15 000

Other (please specify)

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* 12. Do you think the refundable tax compliance credit should be:

A fixed amount irrespective of the taxable income of the business.

Vary per taxable income band (reducing as the turnover increases to cater for the regressive nature of tax compliance costs).

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* 13. Do incorporated (CCs, Companies) and unincorporated businesses (Sole Proprietors, Partnerships) face the same compliance burden?

Yes

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* 14. Is this true for all taxes?

Yes

If no, then in respect of what taxes is the burden different and why?