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Is it possible to be an independent contractor to a company where I am also a director?

Posted 23 June 2015 under Tax Questions



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Warren says:
30 May 2015 at 3:43

Is it possible to be an independent contractor for a small SA business at the same time as being listed as a director for that same company? I contract my services to a private SA company which 100% owned by a London business. The SA company has no full time staff and contracts work out to highly skilled consultants on a job by job basis in order to complete the work. The reason the company has no full time staff is that it operates in a niche market where work is not always regular. I conduct new business activity and help to win contracts for the company which I then get contracted to complete. I also have some other sources of income (rental income in SA and other smaller jobs outside of SA) which make up circ 20% of my income. I work from my own premises, my own hours (in the last year I have worked 100 days for this company) and don't report to anyone. Am I independent?

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TaxTimTaxTim says:
31 May 2015 at 22:18

Are you the director of this company?


Warren says:
6 June 2015 at 6:53

Yes - I am a director.

Thanks.


Warren says:
6 June 2015 at 6:53

I am one of two directors - the other director lives in London


TaxTimTaxTim says:
8 June 2015 at 5:53

Directors are, by tax law, seen to be "employees" of the company and will be taxed as such even if no salary is paid. There is a deeming provision in the tax act which requires this. That is one aspect, the other aspect is that essentially you are providing the work to the company which you could do yourself as your own person. The expenses incurred would be allowed as a deduction regardless as you work from home etc, but as you are the director you are seen to be your own supervision, if that makes sense given you are your own boss. So you are not really independent in that way.


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