What is a company income tax return, and do I have to submit one?
The short answer is yes.
There is a misconception that if a company does not have to submit a company income tax return every year. It is a legal requirement for all registered companies to submit a company tax return on an annual basis, within 12 months after the year end of the company. This requirement is across the board for all companies, whether it is making a profit, loss and even if they are dormant.
What if it not trading or dormant?
A dormant company is a registered entity that has not traded in any way during the given financial year. This company is still a registered active company according to the South African Revenue Service. Thus, if dormant, it is still required to submit a company income tax return, every year. Submitting tis return is simple and is basically a tick block to complete in the opening wizard of the tax return that indicates the company is dormant. This will result in a shortened version of the tax return being generated. Note, however, that if the company is dormant and has assets and/or liabilities, the section of the return detailing this must still be completed.
I am making a loss, surely a tax return is not necessary.
Many people think that if you are making a loss, they do not have to submit a return every year. This is because of another fear that they will have to pay tax if they submit a return. Making a loss is likely to result in no tax payable. This does not make you exempt from submitting the tax return though. Further good news is that this loss is carried forward into the following financial year.
To remain tax compliant with SARS, it is imperative that a company files an income tax return every single year, thereby ensuring an unbroken filing history from the time it is registered.
If you are unsure about any of the above situations, contact us to ensure 100% tax compliance.
For more information on company income tax returns, please visit the SARS website
This article was update on the 24th May 2021