![]() ![]() 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. Utilities, phone, and internet Rental or lease costs. However, keep in mind that expenses are purely an estimation under the tax turnover system. This is related to Medicare and Social Security, and all employers must pay into it. Landline phones generally arent tax deductible. 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. The cost of cellphones and internet use is deductible according to the percentage of their use for business. If the expense being claimed is for a mixture of business and private use, only the portion that pertains to business use can be claimed. Standard small business minimum amount of taxable income: R83,100 What qualifies as a claim To claim a business expense the following applies: The expense must relate entirely to your business and not any private use. The minimum tax threshold for the 2020-2021 tax season is as follows: You can deduct up to 5,000 of business start-up costs, such as legal and filing fees and conducting product or market research. Information about Publication 535, including recent updates, related forms, and instructions on how to file. 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. Deductible expenses Obtaining the deductions Starting your business Operating costs and plant and equipment (depreciation) Advertising and entertainment. So, if you drove 10,000 miles for work in 2020, you would get a tax deduction of 5,750. That drops to 0.56 per mile drive in 2021. ![]() Simplifying business expenses with turnover tax For 2020, this is 0.575 per mile driven for business. ![]()
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