cc taxation?

[shenku]

Hi all,

Okay, so I am new to the business world in general and have just registered my first cc.

Now I have no idea how it works with regards to making money, and paying myself/getting my money out of my CC account.

So for example, I am the only member of the CC - so I get 100% of any dividends, so if my CC makes R100,000 that gets taxed - then I pay myself the remainder in dividends on which I get taxed again?

Is that right? Kinda sucks

[Dave A]

Welcome Shenku.

It's not quite as bad as that.

You can draw a salary, which is an allowable expense of the cc.
This means what you draw as a salary will be taxed in your own hands - not in the hands of the cc.
Any profit left in the cc will be taxed in the cc's hands.

If, after the cc has been taxed and you still have distributable profits (extra cash available to pay to members), you can pay that money to yourself, but it would not be deemed as taxable income. Currently though, that payment would attract something called Secondary Tax on Companies - which is something the cc would have to pay. However, this could all change as soon as the next budget speech.

Ultimately, being tax efficient is about using these various methods of extracting money from the cc to get the most possible money in your hands whilst paying the least amount of tax. And of course still leaving enough money in the cc for it to keep going the following year.

Working out exactly the best way to do this is why you would be well advised to find a reliable accountant to advise you on tax affairs.

[SilverNodashi]

If, after the cc has been taxed and you still have distributable profits (extra cash available to pay to members), you can pay that money to yourself, but it would not be deemed as taxable income.

..... or you could share some of it with me

[Dave A]

Now if you aren't a member of the cc, and it involved enough money, that could attract donation tax (which would be payable by the cc).

If you had influence over the purchasing decisions of a major client of the cc, this might also attract the attention of Scorpions.

[Sgrafitto]

Tax on new businesses

Hi,

There is a special dispensation for Income Tax, if you have one businesses and the turnover is below a certain threshold. (substantial benefits here!)
0% for first 43k (couple this with your first +-R40 of salary not taxed due to primary rebate), then up to R300k @ 10%.
(2007/8)

Also S12E deduction of 100% on plant & mach for manufacturing, & S12E(1A) for other assets. (50%/30%/20%)

Always declare a salary for your efforts as your initial personal tax brackets could be lower than the cc tax of now 28% on taxable income.

Make business your 1st priority, and once you're starting to have a tax problem (after 3 to 5 yrs, yep its takes time to settle), you have a successful business, and can then change your sleepless nights from business mode to save me tax mode.

[Martinco]

Hi,

There is a special dispensation for Income Tax, if you have one businesses and the turnover is below a certain threshold. (substantial benefits here!)
0% for first 43k (couple this with your first +-R40 of salary not taxed due to primary rebate), then up to R300k @ 10%.
(2007/8)

Also S12E deduction of 100% on plant & mach for manufacturing, & S12E(1A) for other assets. (50%/30%/20%)

Also ensure that you are the only member i.e. only one member in the CC, otherwise you lose the special dispensation. ( According to my bookkeeper )

[Vincent]

There is a special dispensation for Income Tax, if you have one businesses and the turnover is below a certain threshold. (substantial benefits here!)
0% for first 43k (couple this with your first +-R40 of salary not taxed due to primary rebate), then up to R300k @ 10%.
(2007/8)

If you need a better understanding of the Small Business Corporation (SBC) tax, you can download a copy from my site, HERE,otherwise, drop us an email and I will send you a copy.