Please note that every effort has been made to ensure that the advice given in this educational material is correct. Nevertheless, that advice is given purely as guidance readers to assist them with particular problems relating to the subject matter of the educational material, and African Venture Group will have no responsibility to any person for any claim of any nature whatsoever that may arise out of, or relate to, the contents of this educational material.
South Africa Corporate Income Tax
What's New on SARS?
27 July 2020 - ITR14 Returns The eFiling pop up message that restricts the filing of the Income Tax Return for companies (ITR14) for the 2020 year of assessment to companies that intend to deregister with CIPC ONLY has been removed. Companies intending to file for the current year, will be able to file using the existing Income Tax Return for companies (ITR14), provided they are not impacted by legal changes that were promulgated in January 2020. Companies impacted by the legal changes promulgated in January 2020 are encouraged to file their returns when the legal changes are implemented with the new version of the Income Tax Return for companies (ITR14).
6 July 2020 - Companies The Income Tax return (ITR14) must be completed and submitted within 12 months after the financial year end of a company. The dates for Filing Season, including CIT, were documented in the Legal Notice to submit returns as published on 3 July 2020.
24 February 2020 – Corporate Income Tax release changes: What is changing? To meet the strategic objective of increasing tax compliance and improving revenue collection, legislative and system changes will be implemented to enhance risk identification and to improve taxpayer experience when completing a tax return. Some of the changes include:
Operational changes and enhancements that support the legal requirements
Enhancements to the current ITR14 and ITA34C
ITR14 form implemented using HTML5 format.
The following legislative and operational changes, while not comprehensive, are being highlighted as it is of particular importance:
Doubtful Debts - s11(JA)), s11(J)(I) and s11(J)(II) New containers and fields are being introduced to manage the deductions. Different percentages can be allowed for doubtful debt deductions. To determine the percentages that can be allowed a distinction needs to be made between IFRS and non-IFRS taxpayers. SARS also needs to determine (in some instances) whether a Tax Directive was issued as proof that SARS approved a higher percentage deduction.
Country-by-Country Notifications Separate Country-by-Country notifications are no longer required as this will be incorporated into the ITR14 return. An additional container in the ITR14 form will be populated serving as the notification to SARS when the new return is released.
Large Business Definition Alignment The definition of “Large Business” was slightly amended. To allow SARS to determine which companies meet this criteria, additional questions and amendments were made.
Manual Capturing of IRP5 Certificates – Update Validations Companies will no longer be allowed to manually capture PAYE credits and will only be able to submit their ITR14 returns with pre-populated IRP5 information. If additional IRP5 certificates need to be declared, the taxpayer needs to visit a SARS branch to have the additional IRP5 certificates captured.
Enhance the Company Classification Codes (SIC Codes) It is important that taxpayers choose the correct codes when completing the SIC codes. The SIC code field will be moved to the “Company/Close Corporation Particulars” section of the return, deleting the duplicate field and changing the label.
Submission of Farming Schedule Companies conducting Farming Activities will in future be required to submit a “Farming Schedule” as a supporting document that must be uploaded when filing their ITR14 return.
Trust Distributions Currently it is not possible to see whether distributions received from Trusts are correctly declared in the ITR14 return. The return will be updated to cater for the capturing of Trust distributions received.
What is Corporate Income Tax?
Corporate Income Tax (CIT) is a tax imposed on companies resident in the Republic of South Africa i.e. incorporated under the laws of, or which are effectively managed in, the Republic, and which derive income from within or outside the Republic. Non-resident companies which operate through a branch or which have a permanent establishment within the Republic are subject to tax on all income from a source within the Republic.
Who is it for?
CIT is applicable (but not limited) to the following companies which are liable under the Income Tax Act, 1962 for the payment of tax on all income received by or accrued to them within a financial year:
Listed public companies
Unlisted public companies
Collective Investment Schemes
Small Business Corporation (s12E)
Share Block Companies
Public Benefit Companies.
What steps must I take?
Register as taxpayer
Every business liable to taxation, under the Income Tax Act, 1962, is required to register with SARS as a taxpayer.
Submit annual tax return For the year of assessment, the filing requirements are as follows:
Every company or other juristic person, which is a resident that:-
derived gross income of more than R1 000
held assets with a cost of more than R1 000 or had liabilities of more than R1 000 at any time during the 2018 year of assessment
derived any capital gain or capital loss of more than R1 000 from the disposal of an asset to which the Eight Schedule of the Income Tax Act applies, or
had taxable income, an assessed loss or an assessed capital loss must submit a return,
Returns can be submitted electronically via e-filing.
Submit provisional tax returns
In addition to annual returns, every company is required to submit provisional tax returns. The first of these returns is required to be submitted six months from the start of the year, and the second at year end, and must contain an estimate of the total taxable income earned or to be earned for that period. Payment of the tax must accompany the return. A third “top-up” payment may be made six months after year-end.
Top Tip: When submitting your return you will need to give the SIC code for your business. To find out your relevant code please click here.
When should CIT be paid?
First payment – within six months from the beginning of the year of assessment
Second payment – on or before the last day of the year of assessment
Third payment – seven months after the year of assessment for taxpayers with February year-end and six months after year of assessment for all other cases.
Tax on Assessment
Payment of tax upon an assessment notice issued by SARS must be done within the period specified in such notice.
Corporate Income Tax is payable at a rate of 28%.
For further information contact African Venture Group.