Most Read Contributor in South Africa, February 2017
The South African Revenue Service ("SARS") has changed
the format of the annual income tax return to be submitted by
corporates by replacing the IT14 form with the ITR14 form. SARS has
indicated that this change is part of SARS' initiative to
modernise corporate income tax.
The introduction of the new ITR14 form came into effect from 4
May 2013. This means that the last day for the completion and
submission of the IT14 forms was 3 May 2013. In particular, any
IT14 forms saved on eFiling which were not submitted by 3 May 2013
will no longer be supported and ITR14 forms will need to be
requested online, completed and submitted. This applies to tax
returns of corporates which are due for submission in the current
year of assessment, as well as any arrear tax returns for previous
years of assessment.
In contrast to the IT14 form which was issued to all categories
of corporate taxpayers in the same format irrespective of the
nature of the entity, the ITR14 is similar to the format of tax
returns for individuals in that the ITR14 form is a customised
return which is populated with different fields and questions
according to the responses completed when filling in the tax
return. The format of the tax return becomes more detailed in
accordance with the status of the entity – i.e. based on
whether or not the company is dormant, and whether the company is a
share block company or body corporate, a micro business, a small
business, or a medium to large business.
For smaller entities, the ITR14 form contains less questions and
fields for completion in comparison to the IT14 form. In contrast,
the compliance burden imposed on larger corporates may increase due
to a number of additional fields for completion and questions being
included in the ITR14. It is now possible for an ITR14 form for a
large corporate to extend to 14 pages in length.
The ITR14 appears to have an increased focus on international
tax aspects, transactions between connected persons as well as
disclosure relating to investments made by corporates. The form
also incorporates more recently introduced tax concepts such as
contributed tax capital and the dividends tax, and has also been
updated to incorporate transfer pricing legislation. In addition,
entities may be required to disclose holding company structures and
SARS has also indicated that it will be compulsory for certain
entities to upload their Annual Financial Statements upon
submission of the ITR14, along with certain schedules such as
controlled foreign company returns (IT10 forms) and schedules for
headquarter company elections.
The change to the new format of the ITR14 is likely to require
significantly more attention and preparation and may entail an
increase in the disclosure of the affairs of corporates for the
current year of assessment and going forward, as well as in
relation to past years of assessment if any tax returns are
overdue. It is also often the case with the introduction of
advanced forms that some system and initial teething problems are
experienced which may cause delays. These factors should be borne
in mind by those involved in preparing ITR14's for corporates,
in particular due to the provisions of the Tax Administration Act
prescribing, inter alia, that the period of limitation for the
issue of additional assessment by SARS is only limited in instances
where the taxpayer has not made any misrepresentation and has
disclosed all material facts. Taxpayers should also exercise
caution when preparing and submitting the ITR14 form so as not to
fall foul of the recently introduced provisions prescribing the
imposition by SARS of the understatement penalty and non-compliance
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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