RAF Claims: Can I Claim for Loss of Income if I Have My Own Business?

A person injured as a result of a road accident that wasn’t solely their fault can claim compensation from the Road Accident Fund (RAF) for loss of income due to their injury.

It’s fairly straightforward to show that you’ve lost income due to injury if you have a full-time employer and regular salary, or did so prior to being injured – but what if you have your own business or are self-employed?

Business owners can claim for loss of income

If you’re a business owner or self-employed entrepreneur in South Africa and have been injured in a road accident, you are eligible for compensation from the RAF for past and future loss of earnings or income. However, it must be possible to corroborate your claim.

The maximum claim for loss of income or earnings

In a RAF loss of earnings/income claim, the compensation that may be awarded for past and annual anticipated losses is capped.

The maximum claim value was first established in 2008, as R160,000 per annum. However, this value is adjusted quarterly for inflation, based on the consumer price index (CPI). For example, the adjusted limit set to apply from 30 April, 2022 is R319,810 per annum.

Details of the new, adjusted limits are published quarterly in Government Gazette notices. They may also be available via the RAF Media Centre.

Complexities of claiming loss of income as a business owner

In the case of an employee, the courts and the RAF may accept company payslips as sufficient evidence of loss of income due to injury.

When it comes to business owners, freelancers and self-employed individuals, proving past and future loss of income is not that straightforward.

How your business entity can affect your claim

The way your business is structured may affect the validity and value of your claim.

If you’re in a business partnership, for instance, the loss is linked only to your share of the partnership’s profits, rather than total business profits.

In the case of a business entity such as a close corporation or private limited company, the loss of income isn’t borne by you in your personal capacity, but rather by the entity itself. This makes lodging a claim for loss of income more difficult.

Documents required to support business owner’s loss of income claim

For a claim for loss of earnings to succeed, it must be clearly demonstrated that the profitability of your business was, or is, negatively affected by your enforced absence, or other direct consequences of the injury you sustained in a road accident.

Documents that can help support a loss of earnings or loss of income claim include:

• your personal tax returns
• comprehensive financial statements prepared by a professional bookkeeper or accountant
• invoices and receipts
• bank statements
• details of past and future contracts.

Challenges of proving income for startups and informal businesses

Many startups don’t have sufficient financial history to provide a starting point for calculating loss of earnings.

Also, some informal businesses operate without bank accounts or verifiable tax and business records.

Unfortunately, this can make it difficult or impossible to substantiate a claim against the RAF for loss of income. In a case like this, it’s vital to get sound legal advice about the viability of a claim and what may be required to support it.