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Individual is a sole trader and has a company: can he be taxed as a micro business or SBC?

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

Q: I have a client who is a sole proprietor.  He has now embarked on a business venture completely different from his trade and wants to register a PTY LTD through which means he will conduct his new business where he will apply for Small Business Tax. 

My question is, if his PTY is eligible for Small Business Tax and fits the criteria, can he still conduct his other business as a sole proprietorship?  Basically, if he is a sole proprietor and director of the new company, will his PTY still be eligible for small business tax if he fits the 'other' criteria?

Looking forwarding to hearing from you.

A: It is not certain if you are referring to the turnover tax (micro businesses) or the small business corporation tax regime (section 12E).  Both in terms of paragraph 3 of the Sixth Schedule and section 12E(4)(a) (both references to the Income Tax Act) the requirement is that the shareholder of the otherwise qualifying company must not hold shares in another company.  A sole proprietor doesn’t hold shares.  

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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