Page 10 - Companies & Dividend Tax
P. 10
COMPANIES & CLOSE CORPORATIONS
SBC – Illustration
• In formulating your answer, you should have identified the following:
• Bizzie currently trades in her own name.
• You would have to discuss the definition of a “small business
corporation” (SBC) and a “personal service” as contained in section
12E(4) as well as a “personal service provider” contained in
paragraph 1 of the Fourth Schedule.
• To become a SBC, Bizzie would have to convert her dry-cleaning
business into a private company. This transaction will lead to a
recoupment of allowances already claimed and a capital gain in her
hands.
• Should Bizzie-as-a-bee Cleaners be successfully converted to a SBC,
the company will be entitled to the following allowances:
• The cost (excluding VAT) of the dry-cleaning machine can now be written off
100% in the first year of use in terms of section 12E(1)
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