We have a client that had a February year end which has now been amended to become a June year end. We are not quite sure how we will handle the 2018 Annual Tax Return Submission as we were under the impression that one cannot compile financial statement
Important:
This answer is based on tax law for the year ending 30 June 2018.
Answer:
The Companies Act, section 27(4) (as does the Close Corporation Act), allows for the board of a company to change its financial year end at any time, by filing a notice of that change, but-
-
it may not do so more than once during any financial year;
-
the newly established financial year end must be later than the date on which the notice is filed; and
-
the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year.
From the information provided, it appears that CIPC approved the change for a period of more than 15 months.
We don’t know when CIPC changed the financial year end, but submit that it can be done retrospectively. We will accept that the notice of the change was filed before February 2018.
In terms of this definition of financial year in section 1(1), the company needs approval from SARS to end its financial year on 30 June – approval by CIPC is not sufficient – this should also have been done before the last day of February 2018. In addition to this approval the company must also specifically request SARS to change the provisional tax dates / returns to 30 June (and 31 December). If this was not done SARS will not be able to process the IRP6’s as it will not have issued one.
If the change of financial year end was approved by, the SARS system will require two IT14’s to be submitted in the 2018 year of assessment. It is our understanding that the SARS system still can’t handle the two returns in one calendar year, and it was then necessary to combine them.