We have 3 companies that changed their Year End from February to June, we already submitted 201802. How do we file the provisional tax due by Friday? Request for correction on 201802 and submit figures for a 16 month year? Are we not limited to 15 months?
Important:
This answer is based on tax law for the year ending 30 June 2018
Answer:
The mistake often made is that the taxpayer does not request SARS, in addition to the approval of the change in the last day of their financial year, to also specifically change the provisional tax dates. If this was not done SARS will not be able to process the IRP6’s as it will not have issued one. Payments made on the IRP6’s for the periods based on the previous approved year end will be allocated to the wrong periods and will result in a late payment penalty.
The Companies Act, section 27(4), allows for the board of a company to change its financial year end at any time, by filing a notice of that change, but-
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it may not do so more than once during any financial year;
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the newly established financial year end must be later than the date on which the notice is filed; and
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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. It also appears that the request was submitted after the date set out in the Notice of Incorporation. In our view, and it follows from point b) above, the new financial year end will then be June 2019 and not June 2018.
Based on the assumption that CIPC approved that the 2018 financial year end is 30 June 2018 and SARS also approved that, the provisional tax position is as follows:
The company must request SARS to change the dates for filing the provisional tax returns and can then request SARS to change the return submitted on February 2018 to the return required on 30 June 2018. The final, or second provisional payment by a company is required to be made “within the period ending on the last day of that year”. The payment made in February would meet that requirement, but the estimate that it was based on may be (or will be) less that the estimate for the full period (more than 12 months). A request for correction will then be required of that return.
A voluntary payment, as an alternative, may not be allocated to the correct year, although we submit that a payment must be made on 30 June, even where the taxpayer is unable to get SARS to change the provisional dates on their system in time.
No return is due on the June 2018 date – based on our assumption. The December 2018 payment must be for the first six months of the amended financial year (that ends on 30 June 2019).