If a Tax payer is registered for Turnover tax and was a freelancer then went to work for a company and paid PAYE received an IRP5 at the end, then went back to freelancing- can you submit an Income Tax return and a Turnover tax or how would one incorporat
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
In terms of the Income Tax Act, the individual concerned will have to submit both a return of income (an ITR12) in respect of the remuneration and other income derived and a turnover tax form (in respect of his taxable turnover). We accept that the individual didn’t elect to be deregistered as a micro business – see paragraph 9 of the Sixth Schedule to the Income Tax Act.
It is not correct to say that the turnover tax is in lieu of other taxes. It merely provides an exemption (see section 10(1)(zJ)) in terms of which, any amount received by or accrued to or in favour of a registered micro business, from the carrying on of a business in the RSA, other than an amount received by or accrued to a natural person registered as a micro business that constitutes—
(i) investment income as defined in paragraph 1 of the Sixth Schedule; or
(ii) remuneration as defined in the Fourth Schedule;
will be exempt from normal tax.