AS DISCUSSED IN PART ONE OF OUR INCOME TAX ACT ARTICLE, ARE YOU MISSING SOMETHING?,
We looked at some of the possible relief for corporates, which are often missed out and overlooked.
So, what exactly are some of these allowable deductions for almost every company?
- Employee’s Tax Incentive
- In order to qualifying for the Employees Tax Incentive, your employees must:
- Be a natural person who receives remuneration and must have a valid South African identity document, Refugee identity document or Asylum Seeker Permit;
- Be between 18 and 30 years of age. This does not apply if the employee is employed in a Special Economic Zone (SEZ Code = Valid). Note: The age validation must take the month of birth into consideration, e.g. if the employee’s month of birth is April then the employer may only claim ETI from April going forward in the year the employee turns 18 and up to March in the year the employee turns 30; and
- Receive a monthly remuneration of less than R6 000.
- Qualifying period:The employee was employed on or after 1 October 2013.
- Employer notsubject to wage regulating measures: The employee’s wage must be at least R2 000 per month.
- Employer subject to wage regulating measures: The employee’s wage must not be less than the minimum wage prescribed by the relevant regulating measures.
The rebate:
- The Monthly Calculated ETI amount per qualifying employee is within the prescribed legislated threshold:The monthly calculated ETI amount per qualifying employee is determined as follows:
For the first 12 months of employment:
| Remuneration | Tax % Rebate | Tax Rebate Amount |
| R0 – R2000 | 50% | R 0 – R999.9 |
| R2001 – R4000 | Fixed | R1000 |
| R4001 – R6000 | Formula X = A –(B x (C-D)) X = tax rebate A = R1000 B = 0,5 C = Monthly Remuneration D = R4000 |
R 0 – R999.9 |
- For the second 12 monthsof employment:
| Remuneration | Tax % Rebate | Tax Rebate Amount |
| R0 – R2000 | 25% | R 0 – R499.9 |
| R2001 – R4000 | Fixed | R500 |
| R4001 – R6000 | Formula X = A –(B x (C-D)) X = tax rebate A = R500 B = 0,25 C = Monthly Remuneration D = R4000 |
R 0 – R499.9 |
- Advantages for Small Businesses
Under Section 12E, Small Businesses can qualify for better tax rates, as well as accelerated wear and tear allowances for manufacturing processes and non-manufacturing processes. According to Sars, the section of the act is in favour of small businesses who meet the requirements as set out below:
- Gross Income may not Exceed R20 million during the year of assessment;
- Shareholders may not hold shares in any other company except listed companies as defined;
- Not more than 20% of the total income consists of investment income or is derived from a personal service provider; and
- The company is not a personal service provider.
- Donations:
Donations made to a registered Public Benefit Organization (PBO) will qualify for a deduction of 10%. You need to keep in mind that It is important to acquire the Section18A donations certificate from the PBO in order to claim the deduction from your taxable income.
- Additional deductions:
- Your business could receive a deduction of 95c per Kilowatt for each kilowatt of energy saved per hour; and
- A building used in your trade may qualify for an Urban Development Zone deduction, should the requirements be met.
For corporates in South Africa it is important to keep these reliefs in mind, especially with possible tax increases in the year ahead. Should you require any additional information, contact us today.
