The South African Revenue Service (“SARS”) implemented several changes to the annual income tax returns for companies (the ITR14) on 26 February 2018 as part of SARS’ ongoing efforts to promote efficiency and compliance.
Two new schedules were added to the ITR14. Firstly, companies that wish to claim the learnership allowance in terms of section 12H of the Income Tax Act will now need to disclose details of its registered learnerships in a separate schedule. In terms of this schedule, separate disclosure is required for learners with a disability and learners without a disability for both NQF levels 1 to 6 and NQF levels 7 to 10. Also, the number of learners and the allowance amount for each of these fields must be completed.
The second schedule relates to controlled foreign companies (“CFCs”). In terms of section 72A of the Income Tax Act, resident companies that hold at least 10 percent of the participation rights in any CFC (otherwise than indirectly through a company which is a resident), must submit a return to SARS. The “old” IT10B Adobe PDF schedule has been replaced with a simplified MS Excel IT10B schedule, which enables companies to declare all CFC information in one consolidated schedule that can be uploaded to eFiling as a supporting document, regardless of the number of interests held in CFCs. The new IT10B schedule must be used and uploaded on eFiling for all ITR14s submitted from 1 June 2018 onwards. This is to accommodate taxpayers that already completed CFC information based on the old format.
Additional disclosure requirements were also introduced for groups of companies that prepare consolidated financial statements. In future, companies with subsidiaries are required to submit a complete group structure together with the ITR14. New questions with regards to the country-by-country reporting regulations have also been added. Companies that are subject to these regulations will have to specify the tax jurisdiction of the reporting entity for the multinational entity group as well as the name of the reporting entity. A number of additional line items have furthermore been added to the tax computation portion of the ITR14 to take other legislative amendments into account.
An example of this new ITR14 is available on SARS’ website for further consideration. Tax compliance officers of companies should carefully consider these new requirements in order to ensure that the relevant ITR14 is completed correctly and that all the required supporting documentation is submitted together with the ITR14. Companies that have already created new tax returns on eFiling but which have not yet been submitted should furthermore consider to what extent these changes will affect such returns.
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This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)