Results 1 to 5 of 5

Thread: Income Tax, Turnover Tax, and freelance work

  1. #1
    New Member
    Join Date
    Nov 2010
    Location
    Pietermaritzburg
    Posts
    7
    Thanks
    1
    Thanked 1 Time in 1 Post

    Income Tax, Turnover Tax, and freelance work

    In January this year I was retrenched and I started doing freelance work as a software developer and web designer. I have up until now not paid any taxes, but I realise that this is something that I probably need to be looking at fairly urgently. When embarking on this freelance business I was not expecting to do as well as I have, and did not register for provisional tax or any other kind of small business tax. I therefore have 3 questions...

    1. Being a software developer/web designer, would I qualify for the simplified micro business taxation option of Turnover Tax?

    2. If not, would I need to back date my income and end up paying in the tax for the months that have passed? My overhead expenses are very low and my monthly turnover puts me in one of the top tax brackets (35%).

    3. Option 2 is a bit scary as I have not provisioned for this at all. Should I need to cough up for the taxes not yet paid, would SARS allow me to arrange a payment plan to 'pay off' the outstanding taxes?

    I have contacted SARS, but the chap I spoke to could not answer me and said I would be contacted within 21 business days...

    Any feedback will be greatly appreciated.

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Based on some other threads, I suspect you might not be able to take advantage of Turnover tax.

    In terms of going forward, file your 2011 tax return and get that squared away pretty quickly. Your tax liability depends on your income for the whole financial year, so just what your liability may be depends on the earnings (and PAYE contributions made?) for the rest of the financial year.

    The next step is probably to register as a provisional tax payer, and start budgeting for tax. You will need to make a provisional payment in February, essentially for the expected tax liability for the 2012 tax year.
    The trouble with opportunity is it normally comes dressed up as work.

  3. #3
    New Member
    Join Date
    Nov 2010
    Location
    Pietermaritzburg
    Posts
    7
    Thanks
    1
    Thanked 1 Time in 1 Post
    Quote Originally Posted by Dave A View Post
    Based on some other threads, I suspect you might not be able to take advantage of Turnover tax.

    In terms of going forward, file your 2011 tax return and get that squared away pretty quickly. Your tax liability depends on your income for the whole financial year, so just what your liability may be depends on the earnings (and PAYE contributions made?) for the rest of the financial year.

    The next step is probably to register as a provisional tax payer, and start budgeting for tax. You will need to make a provisional payment in February, essentially for the expected tax liability for the 2012 tax year.
    Thanks Dave A. This tax thing is a bit worrying, but I suppose ignorance is no excuse... I'll contact a tax consultant and see what the options are.

  4. #4
    Silver Member geraldenek's Avatar
    Join Date
    Jul 2008
    Location
    Somerset West
    Posts
    229
    Thanks
    19
    Thanked 112 Times in 80 Posts
    Hello MidlandsDesign

    As Dave metioned, you will not be able to register for turnover tax as you are a personal service provider.

    For 2011 income tax return:

    you mentioned you started in jan so for the 2011 tax year you will have to compile you income and expenses for jan and feb 2011.

    1 March 2011 - 28 Feb 2012 is for the 2012 tax year only due next year June/July.

    Provisional tax:


    You wil have to register now for provisional tax and do a calculation of your profit from 1 March till end of october. Complete the August 2011 return as Rnul as this had to be submitted already and you will pay 10% penalty. Submit the Feb 2012 return and also a 3rd voluntary return and pay the taxes outstanding for the 2012 year.

    You mentioned that you are at a 35% tax rate, why not register a pty and trade from there with a flat rate of 28%?
    Geraldene Kapp
    Professional Tax Help
    www.mytaxhelp.co.za

  5. #5
    Junior Member
    Join Date
    Nov 2011
    Location
    Pietermaritzburg
    Posts
    21
    Thanks
    4
    Thanked 0 Times in 0 Posts
    I may be able to help with accounting and tax work. I have an office in Hilton.

Similar Threads

  1. Employing a freelance blog content writer
    By johnwarner75 in forum General Business Forum
    Replies: 5
    Last Post: 20-Oct-11, 03:18 PM
  2. Help Turnover Tax
    By Robot in forum Tax Forum
    Replies: 1
    Last Post: 28-Feb-10, 09:34 PM
  3. What I've learned so far as a freelance .....
    By duncan drennan in forum Entrepreneurship and Business Management Forum
    Replies: 5
    Last Post: 05-Mar-07, 10:43 AM
  4. Parliament's 82% turnover
    By duncan drennan in forum General Business Forum
    Replies: 1
    Last Post: 15-Aug-06, 10:32 AM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •