PAYE vs Provisional, Turnover , etc Tax

The_Ogre

The_Ogre

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Does anybody have a breakdown of the advantages of working for oneself and not having to pay PAYE tax (running a sole prop, CC or small Pty)?
 
With prov tax you only pay few times a year. In the mean time your income sits in the bond saving interest.
ADSL/domestic/cell costs are expensed in your company. Does not come out of after-tax money. I think you can claim back VAT as well but not sure
 
Spacerat said:
With prov tax you only pay few times a year. In the mean time your income sits in the bond saving interest.
ADSL/domestic/cell costs are expensed in your company. Does not come out of after-tax money. I think you can claim back VAT as well but not sure
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Does car allowance work differently?

JStrike said:
Dividends are taxed at a flat rate of 15%
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So you issue dividends as your "salary"?
 
As Spacerat wrote, there is a tonne of things you can expense to your company (Legally)
 
You can also do very interesting things via trusts or holding companies. Invert the company structure to a lower tax region. Speak to a consultant about that.
But that sort of thing only makes sense when you have larger money flowing through
 
JStrike said:
Dividends are taxed at a flat rate of 15%
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After paying 28% company tax that doesn't really leave you in a much better position though (actually probably worse than if you had just taken it all as salary).
 
This is quite interesting.

When I registered my Pty last year, the CPIC automatically had it registered for Provisional tax. At first I was a bit apprehensive about that :)
 
Jehosefat said:
After paying 28% company tax that doesn't really leave you in a much better position though (actually probably worse than if you had just taken it all as salary).
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It's about 38% you end up paying. Which is pretty good
But before you pay the 28% company tax, there are many things you may deduct. There is not much you can deduct with PAYE
 
Sure, but to end up with a blended rate of 38% on PAYE you need to earn quite a lot (somewhere around R3m pa)
 
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Not to mention shareholder loans to yourself and earning interest on this...Travel expenses etc.. Pay yourself a commission salary and you can claim back way more tax for instance.
 
JStrike said:
Car allowance? Have a company car
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Company car benefits are taxed quite heavily

oober said:
Not to mention shareholder loans to yourself and earning interest on this...Travel expenses etc.. Pay yourself a commission salary and you can claim back way more tax for instance.
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^^ This !!

froot said:
Only if you are registered for VAT.
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Sure...

I have an industrial property that is owned by a trust that is VAT reg'ed. Then between the property trust and my SW dev company there are LOADS of things you can legally do to minimise the effect of all the various taxes....
 
JStrike said:
Car allowance? Have a company car



Kinda. You can issue yourself a salary and declare dividends. If you really want to maximise it, keep your salary below the tax threshold and pay the rest in dividends
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The dividends route is not really that great. You pay 28%(fixed profit) tax + 15% dividend tax since you can only declare dividends on profit earned not before profit.

It might only be worth it if your personal income tax bracket is greater than the 28% + 15% but I'm unsure if the 15% counts as the "income tax" and you don't have to pay that also.
 
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Ohh you rent out your home "office space" to your business, usually around 15-20% of the area of your house, then you can claim back 15% of all your interest that year on your home loan, rates&taxes bill, levies etc. This goes back into your shareholder loan and you start earning interest on this.
 
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