My client has just changed year end from June to December. Thus he had an audit done in June 2018 and another audit done in December 2018. Can I combine the 2 AFS for June and December and complete the IT14 as for December 2018 but for 18 months?
Important:
This answer is based on tax law for the year ending 30 December 2018.
Answer:
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
the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year. Note, also a maximum of 15 months.
The change in the year end date at CIPC is not acted on by SARS. In terms of the Income Tax Act, the definition of financial year in section 1(1), the company (or close corporation) needed approval from SARS to end its financial year on a date other than the last day of February. This would have applied to the June year end, but also to the December, or new, year end.
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 (final IRP6 for the year). If this was not done SARS will not be able to process the IRP6’s for the correct periods as it will not have issued one.
We are not sure when the change was approved, but it may require two IT14’s to be submitted in (possibly in the year of the change). In the past, SARS didn’t allow for two returns to be submitted in respect of a calendar year – if this applies, the two returns must be combined in one.