Turnover tax is a simplified tax system designed for small businesses in South Africa. It’s an elective tax, meaning businesses can choose to participate if they meet the requirements. Eligibility is primarily based on a business’s annual qualifying turnover, which must not exceed R1 million. It is available to sole proprietors, partnerships, close corporations, companies and co-operatives. Critically, the qualifying turnover excludes receipts of a capital nature, receipts from business funding entities and certain exempt government grants. Furthermore, even if a business meets this turnover threshold, it may still not qualify for turnover tax if it exceeds R1,5 million from the sale of capital assets over a rolling three-year period, or if certain conditions related to connected persons or trusts are met. A business will also be excluded if it has previously registered as a micro-business and then deregistered.