Individual is a sole trader and has a company: can he be taxed as a micro business or SBC?
30 June 2015
Posted by: Author: SAIT Technical
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.