Low Income Sole Practitioner Professional Indemnity Insurance Reduction
Pursuant to the SA Professional Indemnity Insurance Scheme (Scheme), sole practitioners who fit the low income sole practitioner eligibility criteria can apply to the Society for a reduction of their professional indemnity insurance contribution.
To qualify for the reduction, you must be a practitioner who:
- is the principal of a law practice established in SA;
- is not practising in partnership;
- does not employ any legal practitioners;
- does not engage any other legal practitioners as consultants;
- is not engaged as a consultant to any other law practice;
- is not practising through an incorporated legal practice; and
whose gross fee income for the relevant period does not exceed $50,000.
Low income sole practitioners whose gross fee income for the relevant period does not exceed $25,000 can apply to pay a reduced contribution of 20% of the base contribution, plus GST.
Low income sole practitioners whose gross fee income for the relevant period is more than $25,000 and does not exceed $50,000 can apply to pay a reduced contribution of 50% of the base contribution, plus GST.
Gross Fee Income
The Scheme Document defines “gross fee income” as follows:
"Gross Fee Income" in relation to a Practitioner, means the gross income earned by the Practitioner from Legal Practice (including income derived by a service administration or trustee company or trust insofar as its activities relate to the Practitioner's practice except any such income derived from the Practitioner or a practice of which he or she is a partner or director), but does not include –
(a) Income derived by a company from the investment of money;
(b) Salary or wages earned by a Practitioner in relation to his or her employment by any other Practitioner; or
(c) Fees or other income earned by a Practitioner who is a director or Employee of a Practitioner for which he or she is liable to account to his or her employer.
Lawguard Management has determined that the gross income disclosed on your tax return for the relevant financial year, in accordance with either the `Cash Based Accounting System` or `Accrual Based Accounting System`, will fall within the above definition. All business and overhead expenses, and any other deductibles are irrelevant.
Practitioners fitting the eligibility criteria, and who estimate that their gross fee income for the coming period will not exceed $50,000 can apply for the reduction of their contribution prior to the commencement of the relevant period.
The estimate of anticipated gross fee income must be bona fide and verifiable. Practitioners may be asked to justify the calculation if they have previously qualified for the reduction but then exceeded the threshold. The reduction is not a means by which practitioners can pay their contribution by instalments.
Practitioners granted the reduction must adhere to certain threshold reporting and additional contribution requirements (these are set out clearly on the Form E). Breaches of any requirements in this context may be required to be reported by the Society to the Legal Profession Conduct Commissioner pursuant to section 14AB(1)(c) of the Legal Practitioners Act 1981.