In previous articles, I mentioned the tax benefits of your company registered as a small business corporation.Today I will focus more in depth into the requirements to meet in order to qualify as a small business corporation.
- All shareholders must be individuals. Shares my not be held by a Trust or other entity type.
- These individuals my not hold shares any other private company or Closed Corporation. This are not applicable to listed shares.
- If, however, one of these individuals do hold shares or members interest in a dormant company or Closed Corporation and the asset value is less than R 5,000 OR has taken steps to wind-up the company, it can still qualify as a small business corporation.
- Company may not be receiving gross income of more than 20% from the following activities:
The tax rates are very attractive for start-up companies, but please do read my article on estate risk protection.
The small business corporation tax rates for financial years ending between 1 April 2018 and 31 March 2019:
Taxable income Tax rate
R 0 - R 78,150 - No income tax payable
R 78,151 - R 365,000 - 7% of taxable income above R 78,150
R 365,001 - R 550,000 - R 20,080 + 21% of taxable income above R 365,000
Above R 550,000 - R 58,930 + 28% of taxable income above R 550,000
Apart from these lower income tax tables, a small business corporation also receives a favourable deprecation:
- New and unused manufacturing plant, equipment and machinery.
- All other assets on a scale of 50:30:20.
Feel free to contact us for monthly accounting and tax assistance.