Sole Proprietor - Micro Business Tax

Sole Proprietor - Micro Business Tax

• 02 October 2023
• Individuals Tax
• The Tax Faculty Tax Specialist

This FAQ article is based on tax law for the year ending 29 February 2024.

Question:

Regarding sole proprietors projecting a loss in the 2024 tax year, are they obligated to submit a Provisional Tax return even in the absence of taxable income, and if required, should the reported taxable income be zero, while addressing Gross Income reporting requirements, especially when the combined income from the sole proprietorship business and other earnings results in a negative total income?

Answer:

For tax purposes, a sole proprietor is considered an individual, and their taxable income is calculated by subtracting allowable deductions from their total income, which includes income from their trade. If there's a loss in their trade income, it can be offset against other sources of income, like salary, to determine the final taxable income. In the case of a provisional tax return, it will show the turnover and report a nil-taxable income if the sum of all taxable components results in a negative figure.

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