Glossary - Tax
Perks Tax (Fringe Benefits Tax) - It is the tax levied by the government on the non-cash portions of an employee’s remuneration package. This may include the likes of a company car, paid-for holidays, cellphone allowance, clothing allowance, travel allowance, etc.
Private Company - The opposite of a Public Company, in which stocks and shares are traded on the open market, usually via a stock exchange. A Private Company will typically be owned by an individual or partners and is not required by law to publish annual results or to open its accounts or activities to public scrutiny. South African tax law recognises Private Companies, Public Companies and Close Corporations.
Publicly Traded - The opposite of a Private Company. It trades stocks and shares on the open market, typically via a stock exchange or stockbrokers. Owned by shareholders and governed by a board of directors, it is required by law to publish annual results and to open its accounts and activities to public scrutiny and abide by codes of good governance. South African tax law recognises Private Companies, Public Companies and Close Corporations.
Small and Medium-Sized Enterprise (SME) - Definitions of what constitutes an SME can vary from country to country, and may even vary within a single country, depending on the context. In South Africa, for example, for Capital Gains Tax, an SME is a business having total net assets of under R5-million. However, for Income Tax purposes, it is a business with a turnover of less than R14-million (over and above other qualifying criteria).
Sole Proprietor - The simplest form of business structure, where a single individual is a sole owner is the business. Although Sole Proprietors often trade under their own name, there is no requirement to do so and the business may have employees and operate in most sectors of the economy. Profits from the business are viewed as personal income and taxed accordingly. One of the downsides is that there is no limited liability under the law, and the Sole Proprietor is therefore personally responsible for all debts incurred.
Tax Deduction - Money which the tax authorities allow to be deducted from the overall tax liability of an individual or organisation. Tax Deductions may include expenses incurred in the course of normal business operations, or it may be in the form of incentives to, for example, donate money to charitable causes or give support to schemes (such as job creation or exports) which are deemed to be in the national interest.