Page 14 - Companies & Dividend Tax

COMPANIES & CLOSE CORPORATIONS

Personal service provider

• In contrast, a labour broker is:

• any natural person who conducts or carries on a business

• whereby such person for reward provides a client of such business with
other persons
• to render a service or perform work for the client; or

• the other persons are procured for the client.

• Note that with regards to a labour broker without an exemption
certificate, section 23(k) will limit the deduction of expenses (not

allowances) to amounts paid to employees, which will constitute
taxable income in their hands. Remember also that a labour
broker is subject to income tax and employees’ tax at rates

applicable to natural persons unless an exemption certificate is
granted.

• Also refer to the definitions of “labour broker” and “personal
service provider” in paragraph 1 of the Fourth Schedule of the
Income Tax Act.

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