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Is a medical practice operating as a company a small business corporation?

01 June 2015   (0 Comments)
Posted by: Author: SAIT Technical
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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. 

A: S12E(4)(a) 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.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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