tax relief predicted for SMMEs
14 February 2007

Leigh Bainbridge, director and tax specialist at BDO Spencer Steward (Midlands) Inc, anticipates an increase in the interest exemption and a moderate to low progressive tax rate relief for natural persons in South Africa when the budget is announced next week Wednesday. She is also hopeful for further tax rate relief for small, medium and micro enterprises (SMMEs) in the 2007/8 Budget.

Bainbridge predicts an increase of capital allowance incentives for SMMEs that could take the form of "double deductions" in respect of certain types of capital expenditure and a potential amendment to the Section 12H 'Learnership Allowance provisions'.

The current provision provides that employers who offer qualifying learnerships may claim additional tax deductions. The amount of the deduction varies and is limited to a maximum of R50 000 rand per employee, while generous allowances are also available for employers who employ and train disabled persons.

Bainbridge is hopeful that this year's budget will also include a decrease in the secondary tax on companies, stating that, failing this, a decrease in the flat rate of tax for corporate taxpayers could be the way to go.

She adds that a decrease in the compliance requirements would lessen the burden placed on SMMEs, while an increase in the tax-free portion of income earned when a natural person attains retirement age would be an added bonus.

I-Net Bridge, www.business.iafrica.com