The tax implications of contracting as an independent contractor and or a labour broker

Abstract

The provisions in the Income Tax Act ("the Act") relating to independent contractors and labour brokers are limited to a few paragraphs in the Fourth Schedule to the Act. These provisions as well as the South African Revenue Services' official opinion in this regard is not sufficient to address the numerous cases where the facts are not really clear with respect to the capacity in which a person render services. The writer attempts to address the risks of contracting as an independent contractor or labour broker, give distinguishing factors in order to ease the process of applying the provisions of the Act and discuss practical problems which the contracting parties may encounter. Income Tax provisions, South African Revenue Services practices and principles, as established by the courts and case law pertaining to the common law is analysed in order to make conclusions in this regard.