Turnover tax is an optional, simplified tax system available to micro businesses below a low annual turnover ceiling. Instead of calculating taxable income, the business pays tax on a sliding scale applied directly to turnover.
What it means
It bundles income tax, and optionally VAT and dividends tax, into a single simplified calculation and return, cutting compliance work for the smallest businesses at the cost of losing detailed expense deductions.
Where it fits in
Turnover tax and Small Business Corporation (SBC) tax are both concessions for small business, but they work differently - SBC tax is still calculated on taxable income at reduced rates, while turnover tax replaces that calculation entirely with a flat percentage of turnover.
Key rules
- Available only to businesses below a low annual turnover ceiling.
- Calculated on turnover, not taxable income.
- Optional - a business can elect ordinary income tax instead.
- Falls away once turnover exceeds the ceiling or the business registers for VAT compulsorily.
