In some point in time, an employer would require the services of an independent contractor. Very often one would find that the employer does not have sufficient information in his possession to make a decision to either engage the services of an independent contractor or an employee. Most employers would be aware of their requirements should they choose to engage the services of an employee, however the problem or lack of information arises when the employer decides to engage the services of an independent contractor. This might seem as a simple decision; however an investigation into the taxation of independent contractors proved otherwise. Generally an employer would engage the services of an independent contractor to perform a specific task and pay him for that service. However there are various mechanisms in place that would deem that independent contractor to be an employee. Should this be the case, the employer would be faced with extra costs in the form of interest, penalties and additional levies if he did not deduct employees tax from the independent contractor and pay this over to the Commissioner for South African Revenue Services.. The other taxes that are effected by an independent contractor who is deemed to be an employee are, Pay As You Earn, Skills Development Levy, Unemployment Insurance Contributions, Regional Service Levies and the Labour Laws. It is imperative that the employer understands the various laws in respect of the engagement of an independent contractor. Failure to do so or ignorance of the law would be a disadvantage for the employer. The investigation into the tax implications of independent contractor's would highlight the requirements and problem areas that one should be aware of. This would include how to identify if a contractor is truly and independent contractor or deemed to be an employee. This distinction is very important especially to the employer.

Thesis (M.Com.)-University of KwaZulu-Natal, Durban, 2004.