You could save just under R60 000 in taxes when compared to normal tax rates.

JOHANNESBURG - Small business corporations received very minute tax changes in the Budget 2010. But of the few that there were you ought to take note. You could save just under R60 000 in taxes and avoid being smacked with treble penalties for non disclosure. 

According to Colin Wolfsohn, a member of the Saica National Tax Committee, the change that will have the biggest impact on small businesses from Budget 2010, is that there will be no tax on the first R57 000 of taxable income and then they will be taxed on a sliding scale of 10% for the income that goes up to R300 000; normal corporations get taxed at a flat rate of 28% (the R300 000 maximum has not been adjusted for inflation since the 2007 tax year).

To get this benefit, mark off the box on your annual tax return which asks if this corporation is a small business.

The South African Revenue Service (Sars) defines small businesses as a company that has turnover of less that R14m per year. For a close corporation the member has to be a natural person and not part of another corporation.

Small businesses will also benefit from the wage subsidiary, says Wolfsohn, but until the legislation is released, which is likely to be in May, we can't say how. In his Budget, Finance Minister Pravin Gordhan said companies that hire a young person without work experience will receive a wage subsidy.

The voluntary disclosure programme will also have significant reach on small businesses that have not been fully compliant, because of cash-flow problems etc, says Wolfsohn.

How it essentially works, he says, is that from November  1 2010 to  October  31 2011 businesses which give full disclosure of past transgressions will have to pay the full amount of tax that was due on income tax, PAYE or VAT but will not be issued with penalties and Sars will be lenient on the interest.

If you do not disclose and Sars discovers this, which is becoming highly likely with the widening of its net and it using alternative methods to check up on you, you will be slapped with treble tax and penalties, warns Wolfsohn. 

To get the amnesty you will probably have to fill in an application form and make full disclosure of income not declared. In the last amnesty one just gave a figure and there was an amnesty levy, here you have to pay the tax, says Wolfsohn. 

Saica suggest that taxpayers should not wait until Sars approaches them but rather approach Sars with any past transgressions. Lately, Sars has treated such taxpayers with leniency.

Write to Monique Vanek: monique@moneywebtax.co.za

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