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CIDB GRADE 3

HomeCIDB GRADE 3

CIDB GRADE 3

The CIDB grade 3 designation gives construction companies the opportunity to bid for government construction tenders between the values of R 650, 001 to R 2, 000,000. In order to qualify, companies need to have completed at least one single large construction project between the values of R 450,000 and R 900, 000 within the past five years.

Construction projects completed more than five years are not accepted as at the date of application. Therefore, if you are going to be applying for a grade 3, all your project paper work should be within the period of last 5 years. In addition to the above, companies need to also be compliant with the general legislative requirements such as tax as well as the companies and intellectual property commission. I shall be discussing all these requirements in more detail in the paragraphs that follow.

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WORKS CAPABILITY.

Works capability refers to the single highest historical construction projects ever carried out by the company. This of course, within the past 5 years. Let me illustrate this by using an example. Let’s say you had 3 projects in the past 5 years. The first project was R200, 000, The second R400, 000 and the third R500, 000.

You cannot claim a works capability of R1.1 million. The CIDB will only consider the R500, 000 as the single highest project and therefore, qualify you only for a grade 3 despite having performed a total works capability for a grade 4. As mentioned above, the works capability for a grade 3 is calibrated between construction contracts between the values of R450, 000 to R900, 000.

WORKS CAPABILITY.

Financial capability refers to the best of total revenue between two comparable financial years generated by the company. It also refers to the net assets value which is derived by taking the total assets of the company less its total liabilities. For a grade 3, the company can either demonstrate financial capability or works capability because a grade 2 is only measured on its works capability only.

Grades 3 and 4 can be granted based either on financial capability, you need to have generated annual revenue between the values of R1 million and R2 million together with a net assets value between the values of R100, 000 and R200, 000. The net assets value is the net difference between a company’s total assets and its liabilities.

These figures can be found on the statement of financial position in the annual financial statements. Please note that when submitting Annual Financial Statements for A CIDB grade 3 or 4, make sure that the accountant who prepared them is a member in good standing with one of the controlling bodies such as SAICA.

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TAX CLEARANCE CERTIFICATE

It seems pretty obvious that a tax clearance certificate should be the easiest part about complying with when submitting a CIDB grade 3 application however, from the look of things, it appears that there is more to be considered when submitting a tax clearance. In the previous years, tax clearance certificates were valid for a period of 12 months as at date of printing, however, as from late 2019, it appears that the tax clearance certificate is only valid as at the date of confirmation.

What does this mean?

It means that when you submit your tax clearance, you must remain compliant throughout the period of submission. Since you can’t predict the date when the CIDB will be checking on your taxes, it is advisable to remain compliant throughout the entire 21 days submission.

This is especially true for clients who have companies that submit monthly payroll. Should you miss a monthly payroll tax return during the time of application, tax affairs that were compliant a couple of days ago, might no longer be compliant. This is immediate grounds for dismissal of your application. Therefore, it is wise that your company remains fully tax compliant throughout the period of application as well as the periods when your CIDB has been granted. Remember, your CIDB shall be taken down in case of non tax compliance.

COMPLIANCE WITH THE CIPC

The CIDB requires applicants to be compliant with the CIPC as well. Being compliant with CIPC requires the filling of annual returns on the CIPC’s website. To determine if the company is compliant with CIPC, you should print out your latest company’s registration documents from the Commissioners website to determine that your enterprise status is in good standing.

Compliant companies will be indicated by an enterprise status written “In Business” whereas those that need to file and pay their annual returns, shall be indicated with enterprise status “In deregistration process” or “Deregistered”.

SHAREHOLDERS CERTIFICATES

If your company is a close corporation, then there is no need to look for a shareholders certificate, however, if the company’s designation ends with a (PTY) Ltd or (Inc), then a shareholders certificate shall be needed.

The shareholders certificate must at least be done by a competent professional to meet the minimum disclosure requirements and it should be certified within 3 months as at the date of submission.

OTHER DOCUMENTATION

All other documents as mentioned on the application form (Grades 2 to 9) must be certified by a commissioner of oaths. The stamp date must also fall within the 3 months period.

APPLICATION FORM

The application form must be filled in properly and submitted to the CIDB in person. For grade 3, there is no online application. It means you must physically go and hand in the documents at the CIDB offices.

FEES

It will set you back R750 administration fee plus R350 annual fees. Then total, is R1, 100

DURATION

The maximum waiting period, provided that all your documents are in order, is +-21 working days.

CONCLUSION

All in all, a CIDB grade 3 will qualify you for government construction tenders between the values of R650, 001 to R2,000, 000 and will require you to have carried out at least one single large contract between the values of RR450, 000 to R900,000 or to have generated revenue between the values of R1,000,000 to R2,000,000 with a net asset value between R100,000 to R200,000.