![]() ![]() So if you have very high tax-deductible expenses that would reduce your taxable income significantly, it may be in your best interest to claim them under the standard tax system. ![]() However, keep in mind that expenses are purely an estimation under the tax turnover system. Turnover tax minimum amount of taxable income: R335,000įor many small business owners, there are advantages to opting for turnover tax over the standard small business tax. Standard small business minimum amount of taxable income: R83,100 You may deduct only the amount of your total medical expenses that exceed 7.5 of your adjusted gross income. ![]() The minimum tax threshold for the 2020-2021 tax season is as follows: If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. This means businesses registered for turnover tax don’t need to track and report their tax-deductible expenses.Īdditionally, small business owners will usually pay a lower tax rate under the turnover tax system than the standard tax system, and may not even have to pay tax at all depending on their annual income. What does this have to with business expenses? Well, to make record keeping easier, the turnover tax system automatically estimates a company’s business expenses when calculating taxable income. Turnover tax is a simplified tax rate aimed at reducing administration for small businesses with an annual turnover of less than R1 million. If you are registered as a company or sole proprietor in South Africa, you can choose to pay either standard small business income tax rates or elect for turnover tax. Simplifying business expenses with turnover tax ![]()
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