Is a medical practice operating as a company a small business corporation?
01 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: I have just
been approach by a medical doctor to handle her tax affairs but we need some
clarification on the following:
Her previous accountant formed an Inc for
her. So she is trading as xxx Inc.
She is a medical doctor and has 3 employees
(receptionist, bookkeeper and cleaner)
Can the Inc claim the small business corporation
(SBC) rates for taxes?
My interpretation of the law says NO but her
previous accountant says yes.
proviso (ii) ITA excludes any CC that receives more than 20% of its receipts
and accruals from a personal service.
A personal service would include a medical practice.
However it would not be a personal service per definition in
s12E if the CC employs 3 or more persons engaged on a full time basis in that
business in rendering that service.
In our view the latter means rendering a medical service and
would exclude the services of the bookkeeper, cleaner and receptionist.
We therefore agree that she will be rendering a personal
service and would be excluded if more than 20% of all the receipts are from
such service which it would invariably be.
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.