How to File Company Tax Returns in South Africa: Step by Step

Understanding how to file company tax returns in South Africa is crucial for any business owner. Whether you run a small enterprise or a large corporation, ensuring compliance with the South African Revenue Service (SARS) is essential to avoid penalties and maintain a good standing. This comprehensive guide will walk you through the steps of filing your company’s tax returns effectively.

Understanding the Tax System in South Africa

Before diving into the filing process, it’s important to grasp the basics of the South African tax system. South Africa employs a self-assessment tax system, meaning businesses are responsible for calculating their own tax liabilities. This responsibility lies with the business owner, who must ensure that all relevant income and expenses are accurately reported to SARS.

Types of Taxes Applicable to Companies

• Corporate Income Tax: This is the primary tax levied on the profits of companies.
• Value Added Tax (VAT): Applicable to businesses with a turnover exceeding R1 million.
• Pay-As-You-Earn (PAYE): A tax deducted from employee salaries that companies must remit to SARS.

Filing your company tax return involves submitting the annual income tax return (ITR14) specific to your business entity. In addition to corporate tax, you may also need to consider VAT, PAYE, and other applicable taxes depending on your business structure.

Step-by-Step Guide to Filing Company Tax Returns

Step 1: Register Your Company with SARS

The first step in filing your company tax return is to ensure your business is registered with SARS. If you haven’t already done so, you can complete your registration:

• Online via the SARS eFiling platform.
• By visiting a local SARS branch with the necessary documentation, including your company registration documents.

Once registered, your company will receive a tax reference number, which is essential for all future tax-related activities.

Step 2: Gather Necessary Documentation

When preparing to file your tax return, gather all relevant documentation, including:

• Financial statements (income statement, balance sheet).
• Details of all income earned during the tax year.
• Invoices and receipts for deductible expenses.
• Previous tax returns, if applicable.

Accurate and comprehensive records will facilitate the filing process and help you maximize any potential deductions.

Step 3: Determine Your Tax Period

Your company’s tax period typically aligns with its financial year. Most South African companies have a financial year-end of February 28 or 29. It’s crucial to ensure that your tax return covers the correct period. If your year-end differs, you may need to inform SARS accordingly.

Step 4: Calculate Your Taxable Income

To file your tax return, you must calculate your taxable income, which is essentially your total income minus allowable deductions. Allowable deductions can include:

• Operating expenses (rent, utilities, salaries).
• Depreciation on assets.
• Business travel expenses.

For detailed guidance on allowable deductions, refer to the SARS website.

Step 5: Complete the ITR14 Form

Once you have gathered your documentation and calculated your taxable income, you can proceed to complete the ITR14 form. This form can be filled out online via the SARS eFiling platform. Key sections of the ITR14 include:

• Company details (registration number, tax number).
• Income earned during the tax year.
• Allowable deductions and expenses.

Ensure that all information is accurate and complete to avoid delays or penalties. For assistance, you can refer to SARS’s ITR14 guidelines.

Step 6: Submit Your Tax Return

After completing the ITR14 form, you can submit it electronically through the eFiling system. Ensure that you submit your return before the due date to avoid interest and penalties. The deadline for filing company tax returns is typically the end of July for companies with a February year-end.

Step 7: Pay Any Outstanding Tax

If your calculations indicate a tax liability, ensure that you pay the outstanding amount by the due date. You can make payments via the eFiling platform or at your nearest bank. Keep a record of your payment for your records and future reference.

Step 8: Keep Records of Your Submission

Once your return is submitted and any taxes paid, maintain a copy of your ITR14 and all supporting documents for at least five years, as SARS may require them for audits or queries.

Common Mistakes to Avoid

When filing company tax returns in South Africa, it’s easy to make mistakes. Here are some common pitfalls to avoid:

• Submitting outdated information or incorrect figures.
• Missing the filing deadline.
• Failing to keep proper records of income and expenses.
• Ignoring communication from SARS regarding your tax return.

Being mindful of these issues will help smooth the filing process and maintain your company’s compliance with tax laws.

Real-World Example: Filing for a Small Business

Consider a small business, ABC Trading, which has a financial year ending in February. ABC Trading earns R1,500,000 in revenue and incurs R1,000,000 in deductible expenses. The steps they would take to file their tax return would look like this:

1. Register with SARS and obtain a tax reference number.
2. Gather financial statements and invoices for the year.
3. Calculate taxable income: R1,500,000 – R1,000,000 = R500,000.
4. Complete the ITR14 form accurately.
5. Submit the return before the July deadline.
6. Pay any tax due based on the calculated taxable income.

By following these steps carefully, ABC Trading successfully files their tax return and remains compliant with SARS requirements.

Frequently Asked Questions

• What is the deadline for filing company tax returns in South Africa? The deadline is generally at the end of July for companies with a February year-end.
• Can I amend my tax return after submission? Yes, you can amend your return within a specific period after submission, but it’s essential to communicate this with SARS.
• What happens if I miss the filing deadline? Missing the deadline can result in penalties and interest on any outstanding tax due.

By following this step-by-step guide, you can navigate the complexities of filing company tax returns in South Africa with confidence, ensuring compliance and financial health for your business.