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Tax Relief to SMMEs:
BUDGET 2005/06
Tax relief for small business

Delivering his 2005/06 Budget Speech in Parliament in Cape Town on Wednesday, Finance Minister Trevor Manuel said the tax relief would help small companies make resources available for growth and investment.
The tax rate of small companies in other sectors, including close corporations, will be reduced from 30% to 29%.

The South African Revenue Service (SARS) will also help small businesses to be tax-compliant by deploying "tax helpers" to areas where small businesses are situated to help with tax registration, returns and business tax obligations. (Watch our training schedule to see when SARS will be in Saldanha)

Minister Trevor Manuel announced in the National Assembly, when he presented his Budget for the new financial year, that tax relief of R1, 4 billion is targeted at small businesses to encourage growth and investment.

This includes the extension of relief to a broader range of service companies, and raising the turnover limit for eligibility from R5 million to R6 million. Qualifying small companies will pay no tax on the first R35, 000 of taxable income, 10% on income in the range R35, 000 to R250, 000, and 29% thereafter.

Karin Janse van Rensburg
Registration Red Tape to be cut shorter:
President Mbeki said in his state of the nation address on 11 February 2005 that:

” …before the end of the year, government will complete the system of exemptions for these businesses small, medium and micro-enterprises] with regard to taxes, levies, as well as central bargaining and other labour arrangements…

The system of tax and levy payments and business registration will be reviewed, with the aim of introducing a simpler and streamlined system for all businesses by April 2006. Our programme for the coming year is premised on the broad objectives to increase investment in the economy, [and] lower the cost of doing business…

…I especially and warmly welcome the decision of the South African banks… they have made a public three-year commitment to provide at least R85 billion to finance low-cost housing, infrastructure, black small business enterprises and new black farmers.

Elements of the Codes of Good Practice for Broad-based Black Economic Empowerment have been released for public comment, and once this process is finalised, it will then be possible to appoint the Black Economic Empowerment Council.

… it is clear that together, as South Africans, we are set to make a determined effort to speed up broad-based black economic empowerment and small business development.”

Karin Janse van Rensburg

Local SMMEs wanting to improve their BEE rating can now contact the Western Cape BEE office for information and assistance. Contact John van de Rheede @ tel: 021 483 9119 or Lolita Dyi @ tel: 021 483 9114 or Lucinda Rudah @ tel: 021 483 9113.

In response to accusations by SMMEs that Corporates are forcing them to reach BEE status in 6 months or less Philisiwe Buthelezi, chief director for BEE at the Trade and Industry Department, says SMEs should be treated delicately because they are key to economic growth. For this reason, government is releasing a BEE scorecard specifically for SMEs in July.

We hope to give an update in our next newsletter.

Karin Janse van Rensburg

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