Page 254 - SAIT Compendium 2016 Volume2

IN 16 Income Tax acT: InTeRPReTaTIon noTes IN 17 (3)
(4) Place the period of employment identi ed in (2) into a 12 month period by working forward 12 months from the rst day of the calendar month in which the rst day of the period falls. Establish if there is an aggregate 183 day period and a 60 day continuous period during which services were rendered in this 12 month period.
(5) If the 183 day and 60 day periods do not exist in this 12 month period then the exemption will not apply which means that another 12 month period will have to be considered, as described in the next step.
(6) Work backwards 12 months from the last day of the calendar month in which the last day of the period falls. Establish if there is an aggregate 183 day period and a 60 day continuous period during which services were rendered in this 12 month period.
(7) If the 183 day and 60 day periods exist in this 12 month period then the exemption will apply.
(8) If the 183 day and 60 day periods do not exist in this 12 month period then the exemption will still not apply.
Income Tax Interpretation Note 17 (Issue 3) Employees’ Tax: Independent contractors
DATE: ACT: SECTION: SUBJECT:
CONTENTS
Preamble
31 March 2010
INCOME TAX ACT 58 of 1962 (the Act) The Fourth Schedule
Employees’ Tax: Independent Contractors
1. Purpose
2. Background
3. Interpretation of the Fourth Schedule
3.1 Exclusionary subparagraph (ii) of the de nition of the term ‘remuneration’
3.2 Labour Brokers (Paragraph 2(5) of the Fourth Schedule)
4. When is it required of SARS to determine the status of a person?
5. The statutory tests
6. How to apply the statutory tests
7. The common law dominant impression test
8. How to apply the common law dominant impression test
9. The common law dominant impression indicators (the indicators)
9.1 Near-conclusive indicators of the acquisition of productive capacity (i.e. of employee status or non-independent business status)
9.1.1 Control of manner
9.1.2 Payment regime
9.1.3 Person who must render the service 9.1.4 Nature of obligation to work
9.1.5 Employer (client) base
9.1.6 Risk, pro t and loss
9.2 Persuasive indicators of the acquisition of productive capacity (of employee status or non-independent business status)
9.2.1 Instructions/supervision
9.2.2 Reports
9.2.3 Training
9.2.4 Productive time (control of working hours, the working week)
9.3 Indicators resonant of (i.e. creating an immediate or super cial impression of) an employee relationship or an independent contractor relationship
9.3.1 Tools, materials, stationery etc
9.3.2 Of ce or workshop
9.3.3 Integration/employer’s usual work premises 9.3.4 Integration/usual business operations
9.3.5 Integration/hierarchy & organogram
9.3.6 Duration of relationship
9.3.7 Termination and breach of contract
9.3.8 Signi cant investment
9.3.9 Bona de business expenses, bona de statutory compliance
(a) Stereo-typical labels
(b) Stereo-typical clauses and statutory compliance (c) Stereo-typical expenses
9.3.10 Viability on Termination
9.3.11 Industry norms and custom
10. Summary
Annexure A – Flow diagram
Annexure B – Common law dominant impression test grid
Annexure C – The concept of ‘independent contractor’ at common law
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