Corporate Income Tax

You can call it what you want, but corporate income tax is a sure part of our life. Every legal entity that generates an income is liable to pay one or other form of tax. The same is applicable to companies. Corporate income tax is a tax that is imposed on any business that is incorporated under the laws of South Africa.

Corporate Income Tax

The South African Revenue Service has recently launched a new and exciting ITR14 return. This was done in order to aid in the modernization of Corporate Income Tax. This also plays a part in the improvement of efficiency and compliance within SARS. Small businesses should remember of the legislative amendments regarding the ‘Gross Income’ threshold and progressive tax rates.

Corporate Income Tax is applicable to the business that will be mentioned below, but is not restricted to them. The Income Tax Act of 1962 included these types of companies to pay income tax on all the income that they have generated in a financial year.

Corporate Income Tax for these companies include:

  • Listed public companies
  • Unlisted public companies
  • Private Companies
  • Body Corporates
  • Close Corporations
  • Co-operatives
  • Collective Investment Schemes
  • Dormant Companies
  • Small Business Corporation (s12E)
  • Share Block Companies
  • Public Benefit Companies.

 How to get registered for Corporate Income Tax 

The first step will be to get your company registered as a taxpayer. Every business that is liable to taxation under the Income Tax Law of 1962, is required to be registered with SARS as an income tax payer.

Next, you will have to submit your annual tax return. Every registered tax payer, a person or a company, is required to submit a return of income. This should be done 12 months after each financial year. A company can submit their filing electronically via SARS’s e-filing or manually at a SARS branch.

You are also liable to submit provisional tax returns. There payments are to be made every six months. This must also contain estimate figures of the total revenue earned for that period. When you submit your return, you will also be required to give the SIC code for your business. This code can be obtained on SARS’s website.

Before you submit your ITR14, you should ensure that your company’s details are up to date.

When should you pay your Corporate Income Tax

Provisional tax is to be paid in accordance with the following framework of terms:

  • The first payment is to be made within the first six months from the beginning of the year that is being assessed.
  • The second payment will be made before or on the last day of the year that is begin assessed.
  • The third payment is to be made seven months after the year that is being assessed (for companies that uses February as their year-end). Six months after the year that is being assessed in all other cases.

SARS have made multiple methods available to their customers to make their payments of income tax. These methods include:

  • Online Banking
  • e-filing
  • Electronic funds transfer (EFT)
  • By cheque
  • Swift payment method (only to foreign payments)

Nobody wants to pay taxes on their hard owned money,  but in the end it is better to pay it and to get it over with. Do not try and avoid paying taxes, it will only result in major problems for your company. Do the right thing. Have your company registered and pay your taxes.

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