like i said. i haven't delved much into it. but thinking about it i don't think i would want to do it myself. maybe i'd lose the tax paid on my pension each month. i have RAF contributions that i claim on?
I also have not looked into it in much detail. Maybe because at our firm I am yet to see someone use this. And the reason being that the prime benefit is saving admin, record keeping etc, cost of the need for an accountants, and the limit of R1 milion turnover. So as an accounting firm we won't see these because it targets people who don't have the time to do admin or can't afford accountants - and if you do choose turnover tax, you actually don't need an accountant.
The only time you will likely score TAX wise, is when having a low turnover (<R1million) but high profit business, because you get taxed on the full turnover, but at a very low rate based on a scale. First R150 000 is exempt, R150 000 - R300 000 @ 1% and 2% for the amount to R500 000 IIRC. And of course you score on administrational burden and record keeping. For normal businesses not electing this option, you get taxed as per normal on the profit after deducting allowable expenses. To qualify for turnover tax, you also need to have at least three unconnected persons employed in the case where you are offering a personal service as defined, in order to not be seen as "personal services". So you likely will not have such a big profit because you have to pay these persons a salary. After taking your own salary, and allocating travel allowance etc to yourself, you may be better off the normal way.
So I can't really see the benefit other than admin burden being lowered and easy compliance. Because you only benefit tax wise if you have a high profit (thus very little expenses). Two options here: A) the hairdresser or accountant may have little expenses, but it is personal service. So he needs to employ 3 people, which will lower his profit so he will likely be better off as per normal B) the street vendor - but he buys and sells, so he has the cost of all his goods to deduct as expense. So I guess the street vendor, or small corner shop who sells at quite a large profit margin may get a tax save. The taxi driver too maybe.....but he has either rental or vehicle maintenance to pay, as well as fuel.
Bottom line is that, if you do keep record, and keep up with the admin, then there is no real benefit tax wise. But if you don't, then this saves you a lot of time and effort. The most important benefit is the ease of compliance, and of course for SARS this is great because they score more taxpayers. I also see that you don't have to pay VAT (but neither does a normal business below R1m turnover) and also don't have to register for provisional taxes.
See this guide:
http://www.google.co.za/url?sa=t&rc...HgNlxiVUaMWikXMEA&sig2=s2BiosVStXM3Dzqvb3iJ2A
Taxception.