Corporate Income Tax

What's New?

  • 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).

    See the legal changes that were promulgated in January 2020.

  • 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:
    • Legislative changes
    • 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.

Please note that the ITR14 form will be converted from FLEX to HTML5 as a more user-friendly format.

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
  • Private Companies
  • Close Corporations
  • Co-operatives
  • Collective Investment Schemes
  • Small Business Corporation (s12E)
  • Body Corporates
  • Share Block Companies
  • Dormant 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.  You can register once for all different tax types using the client information system.
    Note: For CIPC registered companies you are not required to perform a separate SARS tax registration for Income Tax, as your company will automatically be registered via a direct interface with CIPC.
  • 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?

Provisional Tax
  • 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%.

How should CIT be paid?

Payments can be made using the following options:
  • Online Banking
  • Electronic funds transfer
  • Bank payments
  • eFiling
  • Swift payment method (applicable only to foreign payments).
Note: Please refer to the guide on SARS Payment Rules for more information on the above methods of payment.
 
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Last Updated: 22/10/2020 4:36 PM     print this page
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