New Tax Calculator - Thursday, February 26, 2015
We have updated out Tax Calculator with the new tax rates as presented by Finance Minister Nhlanhla Nene on 25 February 2015, at 2pm.

Try the Free Online Tax Calculator today to see how the new budget affects your pocket! 
You are here > FAQs > Corporate Taxation

Corporate taxation FAQs

Q: When must an entity register as a taxpayer?

Once a company or close corporation is registered with CIPC (South African Companies and Intellectual Property Commission) it is required to register as a taxpayer with SARS (South Africa Revenue Service). An entity needs to open a local bank account before it is able to register, as SARS requires proof of this bank account for the application.

Q: How often must an entity render provisional tax returns?

Any company and close corporation is liable to be a provisional taxpayer. Provisional tax is payable twice in a tax year. The first payment is due 6 months before the year-end and the second payment is due on year-end. A taxpayer can however choose to make an additional third provisional tax payment to reduce the liability of interest levied on the underestimation of provisional tax. The payment must be made within seven months after a February year-end and six months for other year-ends. The provisional tax will be underestimated if the taxpayer's estimated taxable income is less that 90% of the actual taxable income (after offsetting the assessed loss carried forward). SARS has abolished the submission of manual IRP6 returns and all provisional returns have to be submitted via SARS e-filing.

Q: What are the requirements for submission of financials to SARS?

The annual tax return for a company or close corporation is due one year after the year-end. The return is the declaration of the assets, liabilities, income and expenses which are extracted from the financial statements. The taxable income is calculated after certain adjustments e.g. allowance and provisions. Capital gains tax (CGT) will be applicable if the company or close corporation sold assets. The capital gains tax is calculated on 50% of the gain. The gain is calculated as: proceeds less the base cost.

Q: When will SARS issue an assessment?

As soon as the tax return is processed by SARS it will issue an IT34 assessment which will show the taxable income or assessed loss. The assessment will also indicate an amount of tax payable or refundable. If a refund is due, the bank details will be stated to ensure that the refund is paid into a valid bank account. It is important to compare the tax calculation of the IT14 return with the assessment, to confirm that the assessment is correct. If the assessment is incorrect the taxpayer has the right to object.

Q: What is the procedure if SARS makes a mistake?

A taxpayer can object within 30 days after the first date on the assessment. An ADR1 form is used for the Alternative Dispute Resolution process. SARS has 60 calendar days to process the ADR1 and provide a decision. If an ADR1 is declined, a taxpayer can appeal to the decision within 30 days.

Q: Is my business able to acquire tax clearance from SARS?

A taxpayer can apply for a tax clearance certificate for tender purposes or to show good standing. SARS has improved the tax clearance application process by making it possible to apply for a tax clearance via SARS e-filing. This will however only be approved via SARS e-filing if all the taxes are up to date. Alternatively, a manual TCC 001 application form must be submitted at a branch office. The tax clearances are only issued at the branch offices.

Q: If the entity declares a dividend, what are the tax consequences?

When a company or close corporation declares a dividend out of the equity of the entity, STC is payable. SARS has recently introduced a Dividend Tax system which is still being developed. The Dividend Tax was implemented to replace the old STC system. The new tax rate is now 10% of the dividend declared and payable to SARS by the end of the month that follows the month in which the dividend was declared. The IT56 return can be submitted and paid via SARS e-filing.

Q: How can the entity pay any amounts due?

SARS has implemented the SARS e-filing system to ease the burden of record keeping and electronic payments. Payments for the various taxes, penalties and interest can be made via SARS e-filing.

Q: Is it important to keep the static details of the entity up to date with SARS?

It is important to update the records such as postal addresses, public officer and bank details with SARS in order to avoid issues such as refunds paid into incorrect bank account and vital correspondence not reaching the taxpayer. SARS will only update bank details if the details are confirmed by an original stamped bank statement, certified copy of director/member's identity document and proof of registration of the entity (CM29 or CK1).