The Numbers

SBC tables are published by financial year end. Most small companies have a February year end.

SARS publishes this table for years ending 1 Apr 2026 – 31 Mar 2027.

Net profit after all normal deductions, before the section 12E accelerated allowances below.
R
Total receipts and accruals excluding amounts of a capital nature. Used for the R20 million limit and the 20% activity test.
R
Where the year of assessment is shorter than 12 months, the R20 million gross income limit is reduced proportionately.
12 months

Gross income limit: R 20 000 000

Do You Qualify?

Section 12E has to be re-tested every single year. Fail any one test and the company pays the flat 27% for that whole year.

All four must hold for the entire year of assessment.
Dividends, foreign dividends, royalties, rental from immovable property, annuities and interest.
R
Accounting, consulting, legal, engineering, health, IT, management and the other listed fields, where the work is performed personally by a shareholder or a connected person.
R
Excluding shareholders and connected persons. If three or more are engaged full time in rendering that service, the income stops being a 'personal service' altogether.
Capital receipts are stripped out of the 20% test's denominator, but the taxable capital gain is added back in.
R

Tainted income: 1.9% of R 3 200 000 — ceiling is 20%.

Accelerated Write-Offs

Optional. Section 12E lets an SBC write assets off far faster than the ordinary wear-and-tear rates.

Plant or machinery used directly in a process of manufacture, or a process of a similar nature, is written off 100% in the year it is first brought into use.
R
Any other asset that would qualify for section 11(e) wear and tear may instead be written off 50 / 30 / 20 over three years. Not apportioned for part years.
R
R
R

Estimates only — not tax advice. Based on SARS Interpretation Note 9 (Issue 7) and the SARS rates tables. Assessed losses, the section 20 loss-limitation rules, dividends tax on distributions, the section 12E(3) cost-of-moving rules, recoupments on disposal and SARS's list of permitted other shareholdings are not modelled. The turnover tax comparison is a separate elective regime with its own registration rules. Consult a registered tax professional for your company.

Income Tax Payable

R 84 470

At SBC rates on taxable income of R 650 000.

Effective Rate

13.0%

Marginal Rate

27%

SBC Saving

R 91 030

2027 (Mar 2026 – Feb 2027)Qualifies as an SBC

What The Regimes Cost

Tax on the same year, three different ways.

Turnover tax is not shown — qualifying turnover must be R 2 300 000 or less.

Detailed Calculation

Taxable income before allowancesR 650 000
Taxable incomeR 650 000
Tax at SBC ratesR 84 470
Tax at the 27% company rateR 175 500
Tax PayableR 84 470
The graduated rates save R 91 030 against the flat 27%.

How We Got There

Every section 12E test, in the order SARS applies them.

Legal entity

A private company, close corporation, co-operative or personal liability company.

Shareholders are natural persons

Every holder of shares was a natural person throughout the year.

No other shareholdings

No shareholder held shares or an equity interest in another company.

Not a personal service provider

The company is not a personal service provider under the Fourth Schedule.

Gross income limit

Gross income of R 3 200 000 is within the R 20 000 000 limit.

20% business activity test

Investment and personal-service income is 1.9% of receipts and accruals plus capital gains — inside the 20% ceiling.

SBC Rates For 2027 (Mar 2026 – Feb 2027)

Your band is highlighted.

R 1 – R 99 000No tax
R 99 001 – R 365 0007%
R 365 001 – R 550 000R 18 620 + 21%
R 550 001 and aboveR 57 470 + 27%

Four Section 12E Rules That Catch People Out

One dormant shell company costs you the whole year.

If any shareholder holds shares or an equity interest in any other company — even a dormant one, even for a single day — the company is not an SBC for that entire year of assessment. This is the single most common disqualifier, and it is usually accidental.

Three employees switch the professional taint off.

Consulting, legal, accounting, engineering, IT and health income is only a "personal service" if a shareholder or connected person performs it personally and the company does not employ three or more full-time unconnected people in that business. Employ three, and the 20% cap stops biting.

Interest and rent count against you.

The 20% test is not about profit — it is about receipts. Dividends, interest, royalties and rental from immovable property are all "investment income". A company parking cash in a call account can quietly breach the ceiling in a slow trading year.

Qualifying is re-tested every single year.

An SBC in 2026 is not automatically an SBC in 2027. Both the gross income limit and the 20% test are annual, and the R20 million limit is pro-rated down if the company traded for less than 12 months.