[Question] Tax on Small Business

[Ant15]

Good Day guys

I currently work at a school doing teaching, but after hours I do private work as a physio for the disabled children for a maximum of 2 hours a day.

I have bought my own equipment and using one of the schools rooms to do my practice.

What I need to make 100% sure about is what tax I am liable to pay? I earn an income from the school (salary = R9500 p/m) and an income from my practice ( roughly R4000 p/m).

Do pay seperate tax per income or must I combine the two incomes?
Secondly the income from the practice, at what tax rate must I pay it, or since its only
R48,000 p/y do I even have to pay tax on it?

Another thing is, can I charge VAT on the practice invoices and how would I go about that?
Can I claim back for the equipment bought?

Please can someone urgently assist me on this. It would be highly appreciated. Thanks

[Mark Atkinson]

I replied to your other post, but I will copy paste my reply here just for completeness' sake:

Hi Ant15,

First of all, yes you would have to pay tax on the income earned from the practice.

I am assuming you run the practice as a sole proprietorship.

You need to declare income from all sources in your tax return, so you would list both your salary and your income from your physio practice as separate line items on the same tax return. (It just adds to your total tax payable.) I'm not 100% sure but you may be able to register as a provisional tax payer for your practice income, and make half-yearly provisional tax payments.

You may also claim any expenses which are used in the production of that income as deductions. (For example, if you buy massage oil to treat customers, you may claim that as a deduction).

The fact that your income from the practice is only R48000 p/a is inconsequential as your total income combined is over the tax threshold. If you only earned R48000 p/a from the practice, then you would be below the tax threshold and not have to pay tax.

One thing that I think you might have an issue with is the fact that you use one of the schools rooms to do your practice. Do you pay rent to the school for this? If you do, you may claim that as a deduction. If you don't, however, (and this is where I need somebody to back up my opinion) you might have to declare a reasonable rent for that room as an income. My tax knowledge is a bit rusty, but I seem to remember something about if an employer gives you the use of an asset for free or for less than a reasonable payment, you need to declare the difference as an income.

As far as VAT is concerned, I'm not sure whether I would bother registering for VAT at that sort of turnover. (I'm not even sure you would be able to in the first place.) You don't charge or claim VAT until you are registered as a VAT vendor. You only need to register as a VAT vendor once your turnover reaches R1 million per annum. My advice would just be to save yourself a whole lot of effort and steer clear of VAT altogether.

Hope that helps.

[Ant15]

HI Mark

Thanks for the prompt response.

So basically I have to add the income's together and tax accordingly to the total yearly income?

Shot bud

[Mark Atkinson]

So basically I have to add the income's together and tax accordingly to the total yearly income?

In a nutshell, yes.