A recent TikTok clip from 947 Joburg’s Anele and the Club put two numbers in front of small business owners that are worth checking properly: the first R600,000 of turnover taxed at 0% under Turnover Tax, and up to R1,500 a month from SARS for hiring someone aged 18 to 29. Both figures are correct against SARS’s own published rate tables as of the 2026/27 tax year. Neither is new news exactly, but survey after survey of South African SMEs shows both are badly underused, mostly because owners either don’t know they exist or assume the paperwork isn’t worth it. Here is what each one actually does, what it costs you in trade-offs, and how to claim it.
Turnover Tax: the 0% band, and what you give up for it
Turnover Tax is a simplified system for very small businesses that replaces Income Tax, VAT, Provisional Tax, Capital Gains Tax and Dividends Tax with one tax calculated purely on turnover, not profit. Following the 2026 Budget, the qualifying threshold rose from R1 million to R2.3 million a year, effective 1 April 2026, and the tax-free band was set at R600,000. The full rate table for the year ending 28 February 2027 looks like this: 0% up to R600,000; 1% on the amount above R600,000 up to R950,000; R3,500 plus 2% above R600,000 up to R1.4 million; and R12,500 plus 3% above R1.4 million up to the R2.3 million ceiling.
Sole proprietors, partnerships, close corporations, companies and co-operatives can all register, provided turnover stays under the ceiling. The catch, and it is a real one, is that Turnover Tax is calculated on gross turnover, not profit, so you cannot deduct operating expenses the way you would under normal Income Tax. A business with thin margins and high costs can end up paying more under Turnover Tax than it would under the standard system, despite the headline 0% band. SARS also excludes personal service providers and labour brokers without an exemption certificate, and any business or individual earning more than 20% of receipts from a defined list of professional services (accounting, law, engineering, health, IT, education, consulting and similar) cannot use it at all. It is built for a shop, a small manufacturer, a service business with modest overheads, not a one-person consultancy or professional practice.
The Employment Tax Incentive: real money, but not a cheque in the post
The Employment Tax Incentive (ETI) is the second number in the clip, and the R1,500 figure is accurate, but it is easy to misread how it actually pays out. ETI does not put cash directly into an employer’s bank account. It reduces the PAYE an employer owes SARS each month for every qualifying employee, and only produces an actual refund if the incentive is larger than the employer’s total PAYE bill for that period.
To qualify, the employee must be 18 to 29 years old (no age limit applies inside a Special Economic Zone), hold a valid South African ID, asylum seeker permit or refugee ID, not be a domestic worker or a person connected to the employer, and be paid between R2,500 and R7,500 a month for a full 160 hours. Following amendments effective 1 April 2025, the incentive for the first 12 months of employment works out to 60% of monthly remuneration for wages up to R2,499.99, a flat R1,500 for wages between R2,500 and R5,499.99, and a tapering amount above that down to zero at R7,500. In the second 12 months the same structure applies at half the rate, so R750 at the flat-rate band. The incentive runs for a maximum of 24 months per employee, claimed automatically each month through the employer’s EMP201 payroll submission, and squared up twice a year at the interim and annual PAYE reconciliation.
Run the maths on one entry-level hire kept on for two years at the flat-rate wage band, and the incentive is worth R27,000 in reduced PAYE over that period, R1,500 a month for the first year and R750 a month for the second, without the employee’s take-home pay changing at all. For a small business already planning to hire in that age bracket and wage range, it is money left on the table if payroll isn’t set up to claim it.
Where the two overlap
A business can use both at once. Turnover Tax status has no bearing on ETI eligibility; the two sit in different parts of the tax system entirely, one on turnover, one on payroll. A small retailer or service business under the R2.3 million turnover ceiling that also hires young, entry-level staff within the qualifying wage band can legitimately claim both, provided none of the Turnover Tax exclusions apply. The paperwork for ETI runs through whatever payroll software or bookkeeper already handles EMP201 submissions, so for most small employers the real cost of claiming it is checking a box, not building new infrastructure.
Neither incentive is a secret, but neither is particularly well publicised either. If your business turns over less than R2.3 million a year, or you’re weighing up a first hire in the 18 to 29 bracket, it is worth a conversation with whoever handles your books before the next tax year rolls over, not after. For other current support, direct government grants, DFI funding and open tenders, see our full guide to 2026 SME funding programmes and free grants and tenders finder.
