Connect with us
Advertisement

You pay tax on all business income

Many of us earn income from businesses that we run either on a part-time or full-time basis. As a result, we therefore earn profits from such endeavours. The profits earned from the business ventures are taxed in the hands of the respective person earning such income.

I will analyse the tax that is payable on such profits, commonly known as income tax. Basically, I want to show you that you pay tax on all income you earn from a business, save if you invest in certain farming activities. In this article, words importing the masculine shall be deemed to include the feminine.

INCOME TAX

Income arising from a business falls under a category of tax called income tax. Income tax is broad and it can take the form of personal tax if the business is run in the name of an individual. It is worth noting that an individual can run the business in his name or through a name he obtains from CIPA, which we call a trade name. In any case, the trade name is just a business name but the legal person who is taxable is the individual. For your information, most audit firms are run as trade names but they basically are individuals who come together to run a business in their individual capacities without a legal entity.

The tax under discussion could alternatively be called corporate tax if the business is run in the name of a company. When a business is run as a company, it is the company which is taxable as it is a separate legal entity. It is critical to note that businesses are taxable only on their profits, being the difference between revenue and operational expenses. Where a taxpayer is in a tax loss situation, then there can’t be income tax to talk about. I must also hasten to state that for a person to be taxable in his individual capacity, he must have earned more than P36 000 in a tax year. Companies are taxed on the first thebe of profits that they make.

TAXABLE BUSINESSES

Below are some of the common types of businesses that trigger income tax:

Rental income: You pay tax on the rental income you earn from all rented property, less expenses such as mortgage interest, repairs and salaries. Expenses for improvements such as extensions are not tax deductible. Whilst other businesses are eligible for tax depreciation or capital allowances, rental premises on land you own are not eligible for tax depreciation. This means that if you have property on freehold land, no capital allowances are claimable.

However, you can claim capital allowances on developments you make on leased land such as those obtained from government. Most of us think that it is only the rental of immovable property that is taxable but the rental of other property such as generators, musical equipment, tents, vehicles etc are also taxable. Transportation services: Profits from the operation of transportation services provided via buses, trucks, combis and taxis are also taxable just like any other business.

Catering: If you have noticed, there is now a lot of people who are engaged in catering services and these are also taxable businesses, whether big or small. Remember that businesses are taxable on the first thebe they make as profits. Buying & selling: Profits from the buying and selling of various goods such as household goods, clothing, health products etc are also taxable.

Services: Profits earned from service industries such as accounting, company secretarial, training, supply of goods through tenders and salons are just a few of some of the taxable service businesses. Farming: Whilst any farming business is taxable, the rearing of livestock for slaughter is not taxed provided that the farmer rears not more than 300 cattle or 1800 goats or sheep.

For the exemption to apply, the business must be conducted in the name of the individual, who must ordinarily be resident in Botswana. If the business is conducted through a company, the exemption falls away. The other farmers who are not taxed are those who conduct dryland farming (without irrigation or boreholes) on land not exceeding 100 hectares. You will agree with me that it is not possible to list all the businesses that can be conducted but the above are some of the most common businesses being conducted in the country.

YOUR RESPONSIBILITY

The moment you run a taxable business, you must get an accountant to keep your books of accounts, being the record of how much income and expenses your business is making. The books of accounts also show you how much you owe and how much you are owed. The accounts must be prepared whether or not the business is run in the name of an individual.

Well, I am aware that individuals in business and small companies rarely keep books of accounts but the taxman can pounce on them, especially if they make big bucks. So, you better get an accountant today buddy and don’t forget to file your income tax return. Companies also file their income tax returns so that BURS can get a piece of their cake.

Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore is the Managing Tax Consultant of Aupracon Tax Specialists and feedback can be relayed to jhore@aupracontax.co.bw or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

Continue Reading

Columns

The Daring Dozen at Bari

8th December 2020
JEFF---Batswana-smoke-unit

Seventy-seven years ago, on the evening of December 2, 1943, the Germans launched a surprise air raid on allied shipping in the Italian port of Bari, which was then the key supply centre for the British 8th army’s advance in Italy.

The attack was spearheaded by 105 Junkers JU88 bombers under the overall command of the infamous Air Marshal Wolfram von Richthofen (who had initially achieved international notoriety during the Spanish Civil War for his aerial bombardment of Guernica). In a little over an hour the German aircraft succeeded in sinking 28 transport and cargo ships, while further inflicting massive damage to the harbour’s facilities, resulting in the port being effectively put out of action for two months.

Over two thousand ground personnel were killed during the raid, with the release of a secret supply of mustard gas aboard one of the destroyed ships contributing to the death toll, as well as subsequent military and civilian casualties. The extent of the later is a controversy due to the fact that the American and British governments subsequently covered up the presence of the gas for decades.

At least five Batswana were killed and seven critically wounded during the raid, with one of the wounded being miraculously rescued floating unconscious out to sea with a head wound. He had been given up for dead when he returned to his unit fourteen days later. The fatalities and casualties all occurred when the enemy hit an ammunition ship adjacent to where 24 Batswana members of the African Pioneer Corps (APC) 1979 Smoke Company where posted.

Thereafter, the dozen surviving members of the unit distinguished themselves for their efficiency in putting up and maintaining smokescreens in their sector, which was credited with saving additional shipping. For his personal heroism in rallying his men following the initial explosions Company Corporal Chitu Bakombi was awarded the British Empire Medal, while his superior officer, Lieutenant N.F. Moor was later given an M.B.E.

Continue Reading

Columns

A Strong Marriage Bond Needs Two

8th December 2020

Remember: bricks and cement are used to build a house, but mutual love, respect and companionship are used to build a HOME. And amongst His signs is this: He creates for you mates out of your own kind, so that you may find contentment (Sukoon) with them, and He engenders love and tenderness between you; in this behold, there are signs (messages) indeed for people who reflect and think (Quran 30:21).

This verse talks about contentment; this implies companionship, of their being together, sharing together, supporting one another and creating a home of peace. This verse also talks about love between them; this love is both physical and emotional. For love to exist it must be built on the foundation of a mutually supportive relationship guided by respect and tenderness. As the Quran says; ‘they are like garments for you, and you are garments for them (Quran 2:187)’. That means spouses should provide each other with comfort, intimacy and protection just as clothing protects, warms and dignifies the body.

In Islam marriage is considered an ‘ibaadah’, (an act of pleasing Allah) because it is about a commitment made to each other, that is built on mutual love, interdependence, integrity, trust, respect, companionship and harmony towards each other. It is about building of a home on an Islamic foundation in which peace and tranquillity reigns wherein your offspring are raised in an atmosphere conducive to a moral and upright upbringing so that when we all stand before Him (Allah) on that Promised Day, He will be pleased with them all.

Most marriages start out with great hopes and rosy dreams; spouses are truly committed to making their marriages work. However, as the pressures of life mount, many marriages change over time and it is quite common for some of them to run into problems and start to flounder as the reality of living with a spouse that does not meet with one’s pre-conceived ‘expectations’. However, with hard work and dedication, couples can keep their marriages strong and enjoyable. How is it done? What does it take to create a long-lasting, satisfying marriage?

Below are some of the points that have been taken from a marriage guidance article I read recently and adapted for this purposes.

POSITIVITY
Spouses should have far more positive than negative interactions. If there is too much negativity — criticizing, demanding, name-calling, holding grudges, etc. — the relationship will suffer. However, if there is never any negativity, it probably means that frustrations and grievances are not getting ‘air time’ and unresolved tension is accumulating inside one or both partners waiting to ‘explode’ one day.

“Let not some men among you laugh at others: it may be that the (latter) are better than the (former): nor let some women laugh at others: it may be that the (latter) are better than the (former): nor defame nor be sarcastic to each other, nor call each other by (offensive) nicknames.” (49:11)

We all have our individual faults though we may not see them nor want to admit to them but we will easily identify them in others. The key is balance between the two extremes and being supportive of one another. To foster positivity in a marriage that help make them stable and happy, being affectionate, truly listening to each other, taking joy in each other’s achievements and being playful are just a few examples of positive interactions.
Prophet Muhammad (PBUH) said: “The believers who show the most perfect faith are those who have the best character and the best of you are those who are best to their wives”

UNDERSTANDING

Another characteristic of happy marriages is empathy; understanding your spouses’ perspective by putting oneself in his or her shoes. By showing that understanding and identifying with your spouse is important for relationship satisfaction. Spouses are more likely to feel good about their marriage and if their partner expresses empathy towards them. Husbands and wives are more content in their relationships when they feel that their partners understand their thoughts and feelings.

Successful married couples grow with each other; it simply isn’t wise to put any person in charge of your happiness. You must be happy with yourself before anyone else can be.  You are responsible for your actions, your attitudes and your happiness. Your spouse just enhances those things in your life. Prophet Muhammad (PBUH) said: “Treat your women well and be kind to them for they are your partners and committed helpers.”

COMMITMENT

Successful marriages involve both spouses’ commitment to the relationship. The married couple should learn the art of compromise and this usually takes years. The largest parts of compromise are openness to the other’s point of view and good communication when differences arise.

When two people are truly dedicated to making their marriage work, despite the unavoidable challenges and obstacles that come, they are much more likely to have a relationship that lasts. Husbands and wives who only focus on themselves and their own desires are not as likely to find joy and satisfaction in their relationships.

ACCEPTANCE

Another basic need in a relationship is each partner wants to feel valued and respected. When people feel that their spouses truly accept them for who they are, they are usually more secure and confident in their relationships. Often, there is conflict in marriage because partners cannot accept the individual preferences of their spouses and try to demand change from one another. When one person tries to force change from another, he or she is usually met with resistance.

However, change is much more likely to occur when spouses respect differences and accept each other unconditionally. Basic acceptance is vital to a happy marriage. Prophet Muhammad (PBUH) said: “It is the generous (in character) who is good to women, and it is the wicked who insults them.”
“Overlook (any human faults) with gracious forgiveness.” (Quran 15:85)

COMPASSION, MUTUAL LOVE AND RESPECT

Other important components of successful marriages are love, compassion and respect for each other. The fact is, as time passes and life becomes increasingly complicated, the marriage is often stressed and suffers as a result. A happy and successful marriage is based on equality. When one or the other dominates strongly, intimacy is replaced by fear of displeasing.

It is all too easy for spouses to lose touch with each other and neglect the love and romance that once came so easily. It is vital that husbands and wives continue to cultivate love and respect for each other throughout their lives. If they do, it is highly likely that their relationships will remain happy and satisfying. Move beyond the fantasy and unrealistic expectations and realize that marriage is about making a conscious choice to love and care for your spouse-even when you do not feel like it.

Seldom can one love someone for whom we have no respect. This also means that we have to learn to overlook and forgive the mistakes of one’s partner. In other words write the good about your partner in stone and the bad in dust, so that when the wind comes it blows away the bad and only the good remains.

Paramount of all, marriage must be based on the teachings of the Noble Qur’an and the teachings and guidance of our Prophet Muhammad (PBUH). To grow spiritually in your marriage requires that you learn to be less selfish and more loving, even during times of conflict. A marriage needs love, support, tolerance, honesty, respect, humility, realistic expectations and a sense of humour to be successful.

Continue Reading

Columns

Chronic Joblessness: How to Help Curtail it

30th November 2020
Motswana woman

The past week or two has been a mixed grill of briefs in so far as the national employment picture is concerned. BDC just injected a further P64 million in Kromberg & Schubert, the automotive cable manufacturer and exporter, to help keep it afloat in the face of the COVID-19-engendered global economic apocalypse. The financial lifeline, which follows an earlier P36 million way back in 2017, hopefully guarantees the jobs of 2500, maybe for another year or two.

It was also reported that a bulb manufacturing company, which is two years old and is youth-led, is making waves in Selibe Phikwe. Called Bulb Word, it is the only bulb manufacturing operation in Botswana and employs 60 people. The figure is not insignificant in a town that had 5000 jobs offloaded in one fell swoop when BCL closed shop in 2016 under seemingly contrived circumstances, so that as I write, two or three buyers have submitted bids to acquire and exhume it from its stage-managed grave.

This content is locked

Login To Unlock The Content!

Continue Reading
Do NOT follow this link or you will be banned from the site!