Some of our clients had a year change during a Tax year resolving in some difficulties for tax returns that need to be filed. Two Income Tax returns cannot be filed referring to the same tax year. After clarifying with SARS, at first was informed that the
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
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) must obtain approval from SARS to end its financial year on a date other than the last day of February. We accepted that the companies changed their year-end dates to dates other than the last day of February.
In addition to this approval, the company must also specifically request SARS to change the provisional tax dates. 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.
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.
In terms of section 27(7), of the Companies Act, the financial year of the company is its annual accounting period.
The company must then, where the new financial year covers a period of more than 12 months, but not more than 15 months, submit one return for that financial year.
It would be possible that it may require two IT14’s to be submitted in. In the past, SARS didn’t allow for two returns to be submitted in respect of a single calendar year and it was required by them that the two returns must then be combined in one. This should not be happening anymore – if it does, you must inform us.