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Is the commission received by an estate agent ‘remuneration’ for ETI purposes?

12 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I have an estate agent client who wants to make use of the Employees Tax Incentive (ETI).

Is the remuneration spoken of in the ETI Act the same as per section 1 of the Fourth Schedule to the Income Tax Act? I want to know if the commission received by an agent forms part of the remuneration for the ETI. Say he receives R2000 basic salary and R8000 commission will he still qualify for the ETI?

A: You are correct that for the purposes of the definition of ‘‘monthly remuneration’’ in subsection (1) of the Employment Tax Incentive Act, 2013, ‘‘remuneration’’ has the meaning ascribed to it in paragraph (1) of the Fourth Schedule to the Income Tax Act. 

The definition of ‘remuneration’ specifically includes "any amount of income which is paid or is payable to any person by way of any … commission…” 

But note that, in terms of exclusion (ii) of the definition, it would not be remuneration if the amount is paid or payable in respect of services rendered or to be rendered by any person in the course of any trade carried on by him independently of the person by whom such amount is paid or payable and of the person to whom such services have been or are to be rendered. 

We submit that this is confirmed when the Employment Tax Incentive Act states that an ‘‘employee’’ means a natural person—

(a)    who works directly for another person; and

(b)   who receives, or is entitled to receive remuneration, from that other person,

but does not include an independent contractor. 

So the recipient of the commission should qualify if he or she meets the other requirements and then works directly for the estate agent and receives commission not as an independent contractor. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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