SARS eFiling and Turnover Tax: Is It Still Worth It in 2026?

Budget 2026 delivered one of the more meaningful shifts for small businesses in years: the Turnover Tax threshold has doubled from R1 million to R2.3 million, with a new tax-free threshold of R600 000. At the same time, the VAT compulsory registration threshold rose to R2.3 million too, and the voluntary VAT threshold moved from R50 000 to R120 000.

For thousands of sole proprietors, freelancers and small close corporations who were previously locked out of Turnover Tax because they earned just over R1 million, the door is now wide open. But before you rush to switch on SARS eFiling, it's worth asking: is Turnover Tax actually still the right fit for your business in 2026?

A Quick Refresher: What Is Turnover Tax?

Turnover Tax is a simplified tax system for micro businesses — sole proprietors, partnerships, and close corporations or companies with qualifying turnover below the threshold. Instead of calculating tax on net profit (income minus expenses) like standard income tax, you're taxed on a sliding scale applied to your gross turnover. It also bundles in VAT (if you choose), no provisional tax complexity, and simpler annual submissions via eFiling.

What's Changed for 2026

• Threshold doubled: Qualifying turnover is now up to R2.3 million (from R1 million).
• Tax-free threshold up: The first R600 000 of turnover is tax-free under this regime.
• VAT thresholds aligned: Compulsory VAT registration now only kicks in at R2.3 million turnover, and voluntary registration at R120 000 — meaning many Turnover Tax businesses can stay out of the VAT system entirely if they choose.

This is a real widening of the net. Businesses that previously had to use standard income tax purely because they exceeded R1 million can now reconsider.

Where Turnover Tax Still Wins

• Low expense businesses: Consultants, service providers, or agencies with minimal deductible costs benefit most, since you're taxed on turnover, not profit — so if your margins are thin on paper due to few real expenses, Turnover Tax's flat rates can be lower than standard tax.
• Administrative simplicity: One annual return, no provisional tax calculations, and (if you opt out of VAT) no monthly or bi-monthly VAT201 submissions.
• Cash flow predictability: Because tax is a percentage of turnover, it's easier to budget for and set aside monthly, rather than waiting for a year-end profit calculation.

Where It Can Cost You More

• High expense businesses: If you have significant deductible costs — stock, staff, equipment, rent — standard income tax (allowing those deductions) will usually produce a lower tax bill than turnover-based tax.
• Growth trajectory: If you're likely to breach R2.3 million within a year or two, the admin of switching tax systems again may outweigh short-term savings.
• VAT input claims: Businesses with large VATable purchases may lose out by staying outside the VAT system, since they can't claim input VAT.
• Restrictions still apply: Turnover Tax excludes certain professional services (like consulting, legal, and accounting, in some structures), personal service providers, and businesses with investment income above set limits — the higher threshold doesn't remove these qualifying criteria.

The 2026 Decision Checklist

Before deciding whether to register or deregister for Turnover Tax this year, work through:

1. What is your actual (not projected) gross turnover for the past 12 months?
2. What percentage of that turnover is deductible expenses under standard tax rules?
3. Do you fall into an excluded category (personal service provider, professional practice, etc.)?
4. Is your VAT position better served inside or outside the system given the new R120 000 voluntary threshold?
5. How close are you to the R2.3 million ceiling, and how fast are you growing?

How One Practice Helps

One Practice keeps your bookkeeping organised throughout the year so that when it's time to compare Turnover Tax against standard income tax, you have accurate turnover and expense figures ready to hand — whether you're preparing your own numbers for eFiling or handing them to your tax practitioner. We prepare your figures for manual capture; we don't submit returns or calculate your final tax liability on your behalf.

Disclaimer: This article is general information only and does not constitute personalised tax or legal advice. Tax thresholds, exclusions, and rules can change, and your specific circumstances matter. Please confirm your position with SARS, a registered tax practitioner, or the relevant authority (such as UIF or CIPC) before making any decisions based on this content.