Print Page
SBC qualificationI
Thread Score:
Page 1 of 1
Thread Actions

2015/08/07 at 9:07:48 AM GMT
Posts: 2
SBC qualificationI

I have a client who's a doctor.  My question is whether he will qualify as a SBC/SME:

- He is incorporated,

- His turnover is less than R20 million,

- He is the only shareholder,

- He doesn't own any other shares in other entities,

- His investment income is less than 20%

- His personal services income is more than 20%, and he is a personal service provider = health services,

- but, he did employed more than three employees during the year (two admin ladies and one receiptionist).



2015/08/07 at 6:59:17 PM GMT
Posts: 64
It seems that the Doctor’s incorporated practice may qualify as a SBC as defined.
However bear in the mind following:
The R20million pa. requirement relates to “gross income”(as defined in the IT Act) and not mere turnover.
Only Shareholder : Must be a shareholder throughout the tax year.
Owns no other shares: He must not any own other shares at any time during the tax year.
Investment Income: Ensure that you are aware of the definition of investment income as defined under Section 12E (4) (c) of the Act since income such as royalties, annuities etc are included. Furthermore the 20% relates to the total receipts and accruals(excluding capital receipts) plus all capital gains.
Personal Services and Personal Service Provider : see number of employees below.
Where the company employs at least 3 fulltime employees in the practice who are not connected to him throughout the tax year then the personal services and personal service provider requirements will not apply to the company.
I also suggest you familiarize yourself with Interpretation Note 9 (issue 5)issued by SARS in this regard.

2015/08/08 at 7:18:51 AM GMT
Posts: 2
Thank you Mr White. I went through practice note 9. My concern was the fact that it implies that the three employees must be involve in core operations. My question is whether admin and receiption will be seen as core functions?


2015/08/08 at 6:25:31 PM GMT
Posts: 64
Louwrens ,I see what you are saying. For this reason one needs to read what section 12E (4) (d) defines as personal services.
The relevant parts of the definition one are set out below.
“Personal services” in relation to a company..., means any service in the field of,,if –
(i)...; and
(ii) that company...does not employ three or more full- time employees(other than any employee who is the holder of a share in the company ...,or is a connected person in relation to a holder of a share in the company...) ,who are on a full-time basis engaged in the business of that company, ... of rendering that service.”
Applying the definition to the incorporated practice, in my view means that as a business the company will among other things engage full -time employees such as office staff(includes receptionist) ,to enable it render its services.
What do you think?



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.

  • Tax Practitioner Registration Requirements & FAQ's
  • Rate Our Service

    Membership Management Software Powered by YourMembership  ::  Legal