The relationship between a real estate agent and his principal can be either a contract of service or a
contract for services. These give rise to different treatments for both Income Tax and General
Consumption Tax (GCT). The following are guidelines for the tax treatment under both forms of
contract.
Legislative framework:
- Income Tax Act Section 5(1)(c)
- General Consumption Tax Act Sections 2 and 18
General Treatment of Contract for and of Service Income Tax Purposes
Contract of Service
1. A Contract of Service indicates an employment, and amounts paid under this contract are
emoluments. Therefore all statutory deductions are to be made e.g. PAYE (tax); Education Tax (both
employees’ and employers’ contributions), etc.
Under such a contract or arrangement, a person (the ‘employee’) is under an obligation to render
personal services to another person (the ‘employer’) and:
1. The employee is subject to the supervision, direction and control of the employer.
2. The employee holds an integral position within the organization e.g. Accountant/Managing Director
3. The employee does not conduct business on his account
4. There is a legally binding exclusive service agreement between the employee and the employer
See TAJ Guidline for additional information
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