Page 221 - SAIT Compendium 2016 Volume2

IN 9 (5) Income Tax acT: InTeRPReTaTIon noTes IN 9 (5)
(iv) such company is not a personal service provider as de ned in the Fourth Schedule;* (b) ......
(c) ‘investment income’ means—
(i) any income in the form of dividends, royalties, rental derived in respect of immovable property, annuities or
income of a similar nature;
(ii) any interest as contemplated in section 24J (other than any interest received by or accrued to any co-operative
bank as contemplated in paragraph (a) (ii) (ff), any amount contemplated in section 24K and any other income which, by laws of the Republic administered by the Commissioner, is subject to the same treatment as income from money lent; and
(iii) any proceeds derived from investment of trading in nancial instruments (including futures, options and other derivatives), marketable securities or immovable property;
ANNEXURE B Flowchart — SBC quali cation
Is the business registered as a close corporation, co-operative or private company?
No
Yes
Are all the shareholders/members natural persons?
No
Yes
Does the gross income for the year of assessment exceed an amount equal to R14 million or the apportioned limit?
Yes
No
Do any of the shareholders/members hold shares/interest in the equity of any other company/close corporation except as speci ed in section 12E(4) (a) (ii)?
No
There are limitations as to the holding of shares/ interest that shareholders/members may have in another company. To avoid disquali cation, the interest should be in accordance with the speci c exclusions outlined in the section 12E (4) (a) (ii).
Yes
Do total receipts and accruals and capital gains of the company comprise more than 20% of investment income and personal services income?
No
Is the company a personal service provider?
Yes
No
Has the company throughout the year of assessment employed 3 or more full-time employees (excluding shareholders/members)?
No
Yes
Yes
Company quali es as an SBC
Eligible for section 12E deductions and reduced rate of normal tax
Company does not qualify as an SBC
Not eligible for section 12E deductions and reduced rate of normal tax.
* Employment company deleted as a disquali er and substituted by s 23 (1) (f) of the Revenue Laws Amendment Act, 60 of 2008 with effect from 1 March 2009 and applies in respect of a year of assessment commencing on or after that date.
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