A company, Close Corporation or business trust is a separate tax entity for income tax purposes.
Partnerships and Sole Proprietorships are not. Tax will be paid by the partners or sole proprietor. The latter has several implications, namely:
- For tax purposes close corporations are treated like companies.
- Companies pay tax at a flat rate of 28%.
Sole proprietors pay tax at the rates applicable to natural persons.
The applicable tax rate of a partner will depend on whether he is a natural person or not.
Trusts are taxed at a flat rate of 40%
A close corporation and company’s tax year coincides with its financial year. The tax year end for a partner who is a natural person, a trust and a sole proprietor is the end of February.
i. The contents of this article is intended to provide a general overview to the subject matter and is not exhaustive. Specialist advice must be sought about your specific circumstances.
ii. Compiled with the assistance of LEXISNEXIS FORMS AND PRECEDENTS – 26 February 2019.