A taxpayer is currently without a job and applied for freelancing at Content Lab. Content Lab informed him that they will use him for short radio works at the utmost of 2 hours per week, but he must provide them with a directive from SARS. All the directives that he has found on e-filing needs the company detail to be completed. Is there a directive that can be used that does not require the company detail to be completed as he is not an employee?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The current practice generally prevailing (Issue 3) in this instance is as follows: “It is the responsibility of the employer to determine whether the provisions of exclusionary subparagraph (ii) of the definition of “remuneration” are applicable and whether payments are subject to employees’ tax. Not only is this responsibility set by the provisions of the Fourth Schedule, but it is also the employer that is in the best position to evaluate the facts and the actual situation. A SARS branch office is not permitted to consider applications from persons, apparently falling into paragraph (a) of the definition of an “employee”, for confirmation as an independent contractor under exclusionary subparagraph (ii) of the definition of “remuneration”. In the past certain branch offices were issuing a “Letter of Independence” based on the face-value of a written application (often inappropriately made on the IRP30A form that is only intended for use in labour broker determinations). This is no longer done.” The important part is the last sentence. In terms of section 80(1)(vii), of the Tax Administration Act, SARS may reject an 'application' for an 'advance ruling' if the 'application' whether a person is an independent contractor. So, in terms of the law and current practice, SARS will not issue a ‘determination of income tax status’ as the one party requested.