Tax & Advisory FAQs

A Sole Proprietorship is simple and taxes income at your marginal individual rate, which can reach up to 45%. A Private Company (Pty) Ltd is a separate legal entity taxed at a flat rate of 27% (or lower under Small Business Corporation thresholds). Deciding between the two depends on business risk, funding requirements, and net profit margins. An Everest corporate strategist can construct a custom projection for you.

If your company qualifies as a Small Business Corporation (SBC) under SARS rules, you can access progressive tax rates starting from 0% on the first tier of taxable income up to R95,000, and lower rates up to R550,000. Additionally, SBCs qualify for an accelerated 100% depreciation write-off on manufacturing assets in the year they are brought into use.

Contributions to registered Retirement Annuities, Pension, or Provident funds are tax-deductible up to 27.5% of the greater of your taxable income or remuneration (capped at R350,000 per tax year). Any growth within the fund is exempt from Capital Gains Tax, interest tax, and dividend tax.

For individuals in South Africa, 40% of the net capital gain from selling an asset is added to your taxable income and taxed at your marginal rate. The maximum effective CGT rate is 18% (45% max marginal rate × 40% inclusion rate). Individuals also receive an annual exclusion of R40,000 on capital gains.

SARS guidelines on home office deductions are extremely strict. To qualify, more than 50% of your total remuneration must be commission-based, or you must work from home for more than 50% of the tax year as a salaried employee where your employer does not provide office space. The space must also be equipped and used solely for your trade.

Section 11D of the Income Tax Act allows South African companies to claim a 150% tax deduction on qualifying scientific or technological research and development expenditures. The R&D activities must be approved by the Department of Science and Innovation (DSI) to qualify for this incentive.