Dear fellow taxpayer,

Welcome to this week’s bulletin.

We’ve just finished compiling your second tax update for this year and in it we’ve made sure that your Handbook is 100% up to date as far as the Revenue Laws Amendment Act is concerned. You should expect Tax Update 2/2009 to land in your mailbox on 17 April 2009...and that’s just the beginning!

The next few updates you’ll receive will be dedicated to tackling the issues in the Revenue Laws Amendment Act and the aim is to answer all your questions, such as:  

Is deregistering for income tax and registering for presumptive turnover tax the best move for your business?

What’s the best way of accurately calculating your taxable income estimate for provisional tax?

You can’t find the new administrative penalties in the Income Tax Act...so where did they come from?

Make sure you don’t miss a single update this year!

Mailbox
Answered by Matsika Vengesa of Tax Consulting SA

Does SARS have the power to thwart our share transfer?

Dear Matsika,

I have a client who runs a Radiology Clinic which operates as a Close Corporation.

She is the radiologist, she employs three full-time Radiographers, and six other full-time administration staff in her clinic. In addition she employs other Radiologists on a part-time basis.

Her turnover is less than R14 million per annum. She is not a member of another CC or company.

Per the Income Tax Act a business cannot be classified as a SBC for tax purposes if it is a Personal service business which includes Health.

Am I correct in saying that her business does qualify as a SBC because she employs three or more unconnected full-time employees for core operations.

Answer:

You’re correct.

For the business to be qualify as a SBC, no more than 20% of the receipts & accruals must consist of income from rendering a personal service. However, the services will not count as personal services if the CC employs at least 3 full-time employees (who are not shareholders). The Radiology clinic therefore will qualify as a SBC.

Until next week.
 
Regards
 
Nothando Hlatshwayo

Managing Editor
The Practical Tax Handbook