All Income Tax Exempt entities are required to submit annual returns. Returns must be submitted regardless of the exempt status or tax liability. No NIL returns may be submitted unless it is supported by the necessary documents to show that there has been no activity, such as your bank statements.
The income tax return enables the Commissioner to assess whether the approved exempt entity is operating within the prescribed limits of the relevant approval granted. Should the tax return not be submitted on time, administrative penalties will be incurred.Â
Partial Taxation, Payment Obligations and Partial trading rules
Depending on the type of exemption granted to an entity, certain partial taxation rules may apply. This means that, even if an entity holds tax-exempt status, it may still be liable for tax following the submission of its income tax return.
In situations where a tax-exempt entity incurs a tax liability as a result of its return, the outstanding tax must be settled on or before the due date specified on the income tax assessment. The relevant date to observe is the second date indicated on the assessment.
If a tax-exempt entity disagrees with the income tax assessment that has been issued, it has the right to lodge a dispute regarding the assessment.
Should the entity lack sufficient funds to pay the tax liability in full, it is essential to contact the relevant offices to request an arrangement to pay the outstanding debt over an agreed period. Please note, however, that submitting such an application does not guarantee approval, as various factors will be taken into consideration during the assessment process.
Partial Trading Rules:Â Partial taxation is applicable to certain Tax Exempt Institutions as per the relevant requirements. For more details on the Partial Taxation Rules, please clink on the following links:
- Public Benefit Organisations
- Recreational Club
- Small Business Funding Entities
- Home Owners Associations, Body Corporates and Share Block Companies
- Interpretation Note 59: Receipt or Accrual of Government Grants
Annual Returns Submission
Entities not approved for Income Tax Exemption must submit the applicable Annual Income Tax Return based on the legal entity type. An NPC and other legal entity types must submit an ITR14 annual income tax return which must be submitted within 12 months after the financial year end of the entity. A Trust must submit the IT12TR as per the Trust annual filing season.
Only approved Income Tax Exempt entities can submit the IT12EI Annual Return. An NPC and other legal entity types must submit an IT12EI annual income tax return which must be submitted within 12 months after the financial year end of the entity. A Trust must submit the IT12EI as per the Trust annual filing season (annually by the due dates announced by the Commissioner as set out in the annual notice issued). Â If there are any periods that are not covered by the exemption, the entity must submit normal returns applicable to its legal entity type covering those periods.
Where supporting documents are requested in support of a submitted income tax return, taxpayers must direct these to the Requestor, clearly indicating the tax reference number. Alternatively, you can submit your relevant material via the SARS Online Query System on the SARS website. If unsure, you may book an appointment at a SARS branch and submit your relevant material there.
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