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Will the close corporations owned by spouses married in COP qualify as small business corporations?

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

Q: A client is a member of a close corporation and her husband is a member of another close corporation. They are married in community of property. Will both these close corporations qualify for as small business corporations or does being married in COP disqualify that?

Also, must a company/sole trader/cc register with SARS as a SBC or do they automatically qualify if turnover is less than R14 million so that they can enjoy the tax breaks that come with being a SBC?

A: If the member interest of the two CC's fall within the joint estate then we are of the view that the members married in community of property have an interest in the equity of both CC's and therefore do not comply with the requirements of a SBC per s12E(4)(a)(ii) ITA.

Where they would have qualified, the SBC regime is elected in the tax return for the relevant year of assessment.

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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