Is a doctor allowed to operate his practice as a Pty Ltd company or a CC? He employs a locum and two other people in his practice.
Important:
This answer is based on tax law year ending 28 February 2019.
Answer:
There are some tax related issues, but whether or not the individual should incorporate is not really a tax related question. The question is best addressed to the taxpayer’s professional body as certain specialist medical practices may or may not be done through a personal liability company. The following two definitions in the ethical rules of conduct for practitioners registered under the Health Professions Act, 1974 is relevant:
“practitioner” means a person registered as such under the Act and, in the application of rules 5, 6 and 9 of these rules, also a juristic person exempted from registration in terms of section 54A of the Act;
“private practice” means the practice of a health practitioner who practises for his or her own account, either in solus practice, or as a partner in a partnership, or as an associate in an association with other practitioners, or as a director of a company established in terms of section 54A of the Act;
Section 54A is found in the Health Professions Act, 1974.
The number of full time employees is only relevant if the issue of section 12E is considered or a personal services provider.