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Small Business South Africa - The Budget & Small Business South Africa
The Budget at a glance
Marc Hasenfuss
Here is a snapshot of the 2008 National Budget.
Highlights
* 2008 Budget returns more than R10bn to taxpayers.
* Corporate tax reduced from 29% to 28%.
* Simplified tax packages for small businesses with a turnover of less than R1m.
* Compulsory registration for VAT to kick in at R1m.
* Introduction of an electricity levy to support energy efficiency.
* Tax incentives to encourage venture capital equity investment in small, medium and micro-sized enterprises (SMMEs).
* R5bn in tax subsidies over the next three years to support the emerging industrial policy.
* Learnership allowances revamped to encourage apprenticeships.
Economy and fiscal stance
* GDP growth of 5% in 2007 with growth averaging about 4.35 a year over the forecast period.
* CPIX inflation rising to 7.1% in 2008 before declining to 4.9% in 2009.
* Gross fixed capital formation projected to rise from 21% of GDp in 2007 to 24% in 2010.
* Estimated consolidated national budget surpluses of 1% in 2007/8 and 0,8% in 2008/9 with projected surpluses over the three-year period.
* R60bn to support Eskom's capital financing requirements over the next five years.
Tax proposals
* Total tax relief for individuals of R7.7bn.
* Reduction in corporate income tax rate from 29% to 28%.
* Simplified tax regime for small businesses.
* R5bn in tax subsidies over the next three years for labour-intensive industries and industrial policy.
* An electricity levy of 2c per kilowatt hour.
* Fuel taxes to increase from April 2 by 11c.
* A packet of 20 cigarettes will cost 66c more.
* A 759m ml bottle of wine will cost 12c more.
* A 340ml beer will cost 5c more.
* A 750ml bottle of spirits will cost R2.17 more.
Spending on public services
* R33.2bn for provinces mainly for school education, health care, welfare services and roads.
* R6.5bn to municipalities for the extension of free basic services
* R12.5bn for social grants (including child support for up to their 15th birthday in 2009).
* R9bn conditional grants for school building, HIV and Aids, hospital revitalisation and school nutrition.
* R8.2bn for public transport, roads and railway infrastructure
* R6bn for housing, water and general built infrastructure.
* R2.5bn for industrial development and SMMEs.
* R2.6bn more for agriculture and land reform.
* R2bn for 2010 FIFA World Cup stadiums and related infrastructure.
* R2bn more for correctional facilities.
* R1.4bn for higher education, research and knowledge development.
SMEs: Help for the little guys
Marc Hasenfuss
Finance Minister Trevor Manuel's 2008 Budget also made special provision for helping small businesses - with more steps taken to reduce the tax compliance burden. The new measures follow the introduction in 2001 of a lower rate structure, capital gains tax relief and an enhanced depreciation regime for incorporated small businesses. In 2005 small businesses were granted relief from the skills development levy for businesses with a payroll of less than R500 000 a year.
The most important change is that the VAT registration threshold will be raised from an annual turnover of R300 000 to R1m. Manuel said he was asked to look at the VAT system for small businesses.
"I am glad to announce that the 2008 Budget reduces the administrative burden on small businesses by introducing a presumptive turnover tax as an alternative to income tax and VAT for businesses with a turnover less than R1m a year."
He said these measures would significantly reduce paperwork for small businesses while encouraging regular bookkeeping in preparation for migration to the normal income tax system.
Business South Africa - Business property for the South African Entrepreneur. Business opportunities, business plans and business links.
