INDUSTRY NORMS AND CUSTOMS - RESONANT INDICATORS

PERSON WHO MUST RENDER THE SERVICE

2.6 RESONANT INDICATORS

2.6.11 INDUSTRY NORMS AND CUSTOMS

It may be a norm or custom in the industry that a person be an independent contractor. It may be less likely that he would contract in the form of an employee.

The table below, Table 2.1 was extracted from the SARS Interpretation Note 17 and it is a summary of all the items discussed above.

TABLE 2.1 COMMON LAW DOMINANT IMPRESSION TEST GRID

ANNEXUREB

COMMON LAW DOMINANT IMPRESSION TEST GRID

INDICATOR SUGGESTS EMPLOYEE STATUS SUGGESTS INDEPENDENT

CONTRACTOR STATUS

• --iiti- .1 • -I M.iiiii.-i " I . v i k i n g

I V I . ' I I M I I Regime

I inr+'vrinNlrii.il diasriqhl lo) which I.«ite • • • 11lir ni.. .r staff, • * ram maU rials r..iilin--s. pal--tils. t..cliu..|.gy

I •avni.-nl

peri. »1, but regardless of output or result.

I •• f „ 'II .-li... iSi'S which I, ,i ,|:,..„ |llipit|. -III, . I stall.

or raw materials, or routines, patents.

I---I I'l-.IV

l'avlii--lil|.v a ral- xiiiv-p.-rj, .Jbulwith reference to results, or payment by ••iilpiil- 'results in i liii>.-|..'iii-r.

at !•-nil ar niTTT

£1

o _ 2

§1

a. %

< £

IVrs, a,,..J,,, must L I , . I.-i I service

I 'i-rsi 'ii i i|i||i|.« I li • r.-ii'l-r s.-r.ice pi Mir- is :•• fires only with appn •'. al

I'-I's.-n. . I N .'iu|.|i -v.-l. . - . I I I • I- -!--• 3- i l " li... l i l r . ' X Iff. • ivvn employees, or .-an sitho itilraol IL,lur.;ii|..|.li.)aliont.:rA'ork l ' " f S " l l " | . | l i | . " l l i . | . . . p i - - s e n t . '-V"ll i l t l , - p - i s

no work to lie done

with one emptoyBrtParHcutartyfOr independent business test)

|'..|s..|i 11'.... I., 1.1 ill-1.11 ill III l| ' I " o.||.'UI|..|il c l l - n l base (esp. if tries to build client base - advertises etc)

I nt|.|..'. " i ' - ' l i . . i i l . | . „ . .

I;i4. Profit 8 Loss Employer bear, risk 'pavs despite poor I'.'l'l. .I'll i.iln :-'s|..,v III | | ' K " | S " p a l l ial Hall, li f In. l-r-'ivlenl business lest.

person bears risk .had workmanship, pric hikes, lime • •',.f-runsi

liisiruelii'iiN '-.u|..'i\Ui Employer inslruels.'ii location, .vhai work.

sequence ol work. etc. or has the right to do T a T ^

l ' . - l ^ i | l - | . - t " l l l l i l l - - s ."-VII >V..Ik. Sequence " I work. etc. Bound bv contract terms, not orders as lo what w fk. where, etc

erson l i ' . I ' il.li.i". 11'' make reports Control through oi al'written reports

II

^{l i .nuna} Employer controls by training the person

in the employer's methods

'•/v. .ik-.| uses trains in o.vu iii-'ili- "Is

Productive Inn.- • '.York hours.

work week)

•.. .iiir. .||-..| or s--i bv "ini I .y"-rl '..is' -n v'v.iks lull lime or substantial!'.'so

'VI |"-rsi.iis -liscr.-tii.il

|....|s.„,.,l-,-,a|s.,l.„„.,>-,,..|c T r ^ T ^ n ^ v ^ n T ^ ^ n ^ M K c T i T a r

requirement thai Person provides ^ m r \ w u a l ^ ^ T ^ ^ n T ^ r ^ a ^ T T ^ T ^ ^ i

OlllCe/ W o r k s h o p . A l l l l l l l ' secretarial, elc

IT..',I-|.-.| I.-. • • I i i | | , , . . | . ;. ilillaclll.il requirement that Person provides

•llll.iclllall. necessarily |.|-. |.|.-l I- l'..|:-,.|i

l l l l - - . | l ' a l | . i | | ' " a i a i p i i ' i n l I mi'loy.-rs usual busin.'ss po-imses I ' - r s - n - * , , l , I , liii....lialii.ii.iJsiialbusiii.-.s

operations

Person s service Tilioalinl..gi.il part ol employers operations

Person s services .lb- iiici..|..|ilal I.. Hi.

employers opeiaUons or success Int.-ii' IIII.II lli.-rarcliv >i

Organogram

r - 1 , . , II n.is i|. i|.|. .sunali. in. a position l i til-employer's hierarchy

I ' " I s . .|l 'I..SI- in i t - - I bv l ' l " l - - - . , l " l i •>! l l a - l - - . Ilo position In the hierarchy

I'urilii.ii "I Iv'lali..nsiiip |.|.-..].lixe..llenii^reii..>yal:.|... ..ivlson A o i k e r

Iainil".| Willi I'.-lard t • resnll. hinds business despite worker's death

< ' 5

> 8 llir.'.ii..||.rminaii..

Preach ol Ir

I lllpl'.'."!' ill.iv dismiss lie.... I PA equity aside), worker may resign al will (BCEA aside)

I iiip|i.'.'erin|.r.M.'II ilill.-niiinal", pr-in ilin• -Iv.

Person in breach il fails lo deliver product/service

ml leant III.'--SIIIII-II l l l i p | i . v . . r l l i , a n , ; i . s p r . a i l i s . A . l.iols. lav, mat--rials, training, «to

l1--rs..i,li,,an.-,.spr--i„is..-, l-..,|s. rawnial-rials.

Iraiiiitid. etc

l-mpl..-, I".n.-lils I sr.-cial]yi|.|.'si'in.-ll..iewar-ll..','all'.' l'--rs.-ii I I . . | .•li.|i|.|--|i.i'|..-ii..|iis :"...<; ;v; • •.q.,-us--s . .r staiul. .rv

compliance

No I.USUI.ass expenses. ti.lv--I ..>.p.,ns,.s and/or reimbursed by employer.

Registered with trade/professional Association

.' >'."-r-li.-a. Is |,mil int.. contract prices.

I a-list--i.-I i II 1.1- r I.e. I aboiir statutes .'•: y.ii ll'a.|..'pr..|..ssi..|ialAss,.ci,ili..n

.'lability oil lemilnatl..ii • Jl'li'led I'. appp . I ' l l .ill I lllpl. ..111..lit .LI -v of labour broker to obtain new work (particular! y tor independent business tesl).

Has o l h v r clients, c .nllnues Ira. ling. W a s ,i labour broker or Independent contractor prior to this contract

Militate avlaillsl jM. |. .p..||.|„|il vi.,1-ililv l.lake il lik-lv I'..-rs..i i is. inpl. . v .

I'lnsirv Norms. • .usionr- Willpramolo independent viability

Make If likely Person is an Independent contractor or labour broker

Obtained from SARS Interpretation Note 17 dated 28 March 2003

THE DECISION PROCESS

As stated in an article by Surtees (2003), the first step in the process is to determine under which paragraph of the definition of employee the person falls.

Then certain questions follow depending on which paragraph applies. This process of the decision tree is as appearing in flow diagram 2.1 which was obtained from SARS

The following is a brief summary of the flow diagram 2.1, which helps determine if employees tax is deductible or not.

Is the person other than a company in receipt of any remuneration?

If yes, is the person under the control or supervision as envisaged by paragraph (ii)(aa) of the definition of remuneration.

If yes, employee's tax is deductible.

If no, is the person in receipt of regular payments as envisaged by paragraph (ii)(bb) of the definition of remuneration?

If yes, no employee's tax is deductible If no apply the dominant impression test.

Is the dominant impression that of an independent contractor?

If yes, no employees tax deductible.

If no, employee's tax is deductible.

FLOW DIAGRAM 2.1 TEST TO DETERMINE IF PAYMENT IS SUBJECTED TO EMPLOYEES TAX

FLOW DIAGRAM ANNEXURE A

The person is a (a) type of employee in

receipt of remuneration

The person is a (b' type of employee in

receipt of remuneration

The person iea(c) type of employee in

receipt of remuneration

Is person a resident in RSA?

ve*

Is conin A "i supervision or regular

payment present as envisaged by paragraph (ll)(aa) or

• l'lx'4 reimiieialion"?

\h 'res

Apply the grid

Dominant impression that of

an independent contractor?

Not subject to employees'

Is the labour broker registered

for employees tax purposes and are all returns up

to date?

Subject to employees' tax

H i e person is a (e) or (f) type of employee in receipt

of remuneration

Is the person also a labour broker

as defined?

Ik.

present?:

Gross income more than 80% from any one dent or associated Institution?; or Provides the services ol any other labour broker?: or

C on t ra ctua I y oh liged to provide services of specified employee?

ftpply the grid

Dominant impression that of

an independent labour broker?

rk.

Not subject to employees' tax (issue exemption certifcate if

compliance requirements are mett

SARS interpretation Note number 17 Dated 28 March 2003.

Whichever test is utilised it is essential for employers to evaluate every potential independent contractor relationship by assessing all the factors in an attempt to establish whether the relationship has been determined. In future attempts by employers to evade the various obligations set out above will be lessened by the willingness of the courts to enquire into the true nature of the relationship rather than simply to accept the parties' arrangements at face value.

An independent contractor should not be confused with a labour broker. A labour broker is defined in the Labour Relations Act and refers to a business whereby a labour broker, for reward, provides a client with persons to do work for the client and for which work those persons are paid by the labour broker. The persons provided to the company by a labour broker such as temporary workers would therefore be in the employment of the labour broker and not in the employment of the client. However an employee employed by a labour broker does have recourse against both the labour broker and the client in the event of an unfair labour practice.

Dalam dokumen An investigation into the tax implications of independent contractors. (Halaman 30-34)