[Question] Turnover Tax - Qualification Criteria

[MiaL]

I have a client interested in registering for turnover tax.

They have answered yes to all the questions in the quick test, except the question relating to shareholding

The business whom want to register for the tax, however have no shares in any other business, it is only the shareholder whom is part of an employee shareholder scheme, would he still be able to register his start-up business for turnover tax?

[Andromeda]

Hi, it merely means that that the company's shareholder\s must have no other shareholding. In other words the owners or shareholders must not be owners or shareholders of any other entity.

[MiaL]

Thank you for the feedback.
In this case therefore this business will not be able to register for turnover tax - because although the business itself holds no shares in another entity, a shareholder does.

These shares are of no benefit (at the moment) as it forms part of an employee share scheme, where he will only qualify for any benefits and/or distributions once he has been with the company for a certain amount of time - however his new start-up business will still be disqualified?

[Andromeda]

Is the employee share scheme a trust? Or are the shares held in his own name? If they are is his own name then his company is also not an SBC and pays tax at 28% from the first cent of profit. The business holding shares is not the problem; it is the shareholder. The reason is simply to prevent a situation where a non-SBC becomes an SBC simply because the owner breaks up the company into smaller entities.

The tax acts do not specify types of shareholders, merely that a shareholder may not own shares in another entity other than listed ones, so I am making an assumption that may be invalid.