Corporate Tax

Vital info when finishing your corporate revenue tax return

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From Helene Fourie

Completing the corporate income tax return (ITR14) is becoming increasingly difficult for some taxpayers due to the information and details required to be disclosed in order for SARS to provide an accurate assessment.

Helene Fourie

Failure to provide full disclosure and correct completion of the mandatory forms can result in sanctions and far-reaching assessments by SARS.

Taxpayers are also reminded to keep all supporting information for a period of five years from the date of filing the tax return.

Three-year limitation period

Section 99 (1) of the Tax Administration Act provides for a three-year limitation period after which SARS cannot resume an assessment unless a taxpayer has committed fraud, provided false information or failed to disclose essential facts.

If it turns out that one of the above cases applies, SARS ยง 99 (2) of the law can be exercised, which states that the statute of limitations no longer applies and thus gives SARS the right to make an assessment about the statute of limitations of. beyond resume 3 years.

This means that failure to fill out the ITR14 correctly could result in SARS being subject to a later income tax assessment beyond the three-year period.

Tax calculation

It is important to ensure that the tax calculation section of the ITR14 is carefully completed and that deductions are claimed under the correct category or section. Otherwise the correctness of the information in the tax return and thus also the limitation of the assessment could be impaired.

Capital gains tax

Full and proper disclosure of capital gains tax transactions is essential, especially when there are capital losses. Proper disclosure ensures that the correct balance of capital loss is carried forward to future tax years for offsetting against future capital gains. Failure to properly report the capital loss could result in the company losing the capital loss.

Also read: Tax Strategy – Why It Matters and When To Start

Penalties for understatement

Failure to fill in the ITR14 correctly can lead to SARS penalties for understatement. This can be between 10% and 150% or even 200% if the behavior of the taxpayer is seen as a hindrance or as a recurrence. It should be noted that any adjustment to an identified loss comes with an understatement of 28% of the calculated deficit.

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It is crucial for taxpayers to understand the consequences of submitting inaccurate information in the ITR14 filing, even if it is inadvertent. Due care and diligence must be exercised to ensure that taxpayers can rely on the three-year statute of limitations and avoid SARS penalties being too low.

In order to mitigate potential risks, it is recommended that taxpayers consider reviewing their corporate income tax returns over the past three years. The good news: If errors are found, there are certain procedures (depending on the type of error) to correct them.

For many taxpayers, however, such a proactive approach is beyond their core competencies or capacities. This is where it becomes crucial for the technical input. Arro is able to offer our customers expert advice and support and to develop proactive tax solutions together with them. It is important that the Arro team is able to identify potential challenges that the taxpayer could face at an early stage, identify and manage risks and determine planning options.

The core message for taxpayers is: don’t wait for tax challenges; Get expert advice now to make sure you stay compliant and have a tight grip on your financial future.

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