The corporate tax year is the same as the company’s financial year. It may be changed upon application showing reasonable cause.
Annual income tax returns must be submitted within one year from the end of the company’s tax year. The annual tax return includes a supplementary reconciling return where requested. Furthermore, schedules apply for CFCs, short-term insurers, mining companies, headquarter companies, and learnership allowances.
‘Signed off’ financial statements are required to be submitted with the annual tax return.
Payment of tax
Payments are made with provisional returns filed at six-month intervals from the tax year-end based on an estimate of taxable income for the year. Interest is charged on any underpayment outstanding for more than six months after the tax year-end, except in the case of February year-ends, in which case it is seven months. Any balance (together with interest) is then paid following assessment.
Tax audit process
There is no prescribed audit process, and an audit can be initiated by any factor as determined by the SARS. The audit or inspection will commence with a request from the SARS for the taxpayer to make available any such records or information as may be required.
Statute of limitations
Tax debts to the state prescribe after a period of 15 years. Tax returns submitted that have been assessed may not be reopened after a period of three years from date of assessment by the SARS or five years if it is a self-assessment by the taxpayer, unless there has been fraud, misrepresentation, or non-disclosure by the taxpayer.
The prescription period may be extended by three years in the case of an assessment by the SARS or by two years in the case of self-assessment in respect of certain complex matters, such as transfer pricing and general anti-avoidance cases.
Topics of focus for tax authorities
The SARS, in their 2015/16 to 2019/20 Strategic Plan, stated that they will focus on the following areas:
- Large business and transfer pricing.
- The construction industry.
- Illicit cigarettes.
- Undervaluation of imports in the clothing and textile industry.
- Small business and cost of compliance.
- Collaboration with other jurisdictions on tax base erosion.