ITR14 Under Scrutiny: Why SARS Is Watching—and How to Stay Compliant

ITR14 Under Scrutiny: Why SARS Is Watching—and How to Stay Compliant

• 22 May 2025
• Corporate Tax
• Marita Jordaan

In South Africa’s fast-changing corporate tax environment, one thing is clear: the stakes for ITR14 compliance have never been higher. SARS is intensifying its efforts to close the tax gap, placing companies of all sizes—whether active or dormant—under increased scrutiny.

In recent years, there has been a notable rise in Requests for Information (RFIs), audits, and additional assessments, many of which arise from errors or omissions on the ITR14 return. Given the extensive powers SARS holds under the Tax Administration Act (TAA) No. 28 of 2011, businesses can no longer afford to treat tax compliance as a secondary concern.

The Legal Obligation to Take “Reasonable Care”

Section 223 of the TAA is clear: taxpayers are legally obligated to exercise reasonable care when completing any return and must have reasonable grounds for the tax positions they take. Failure to do so can result in automatic understatement penalties of 25% or 50%—even in loss-making years.

While the burden of proof rests with SARS, taxpayers must ensure that their return preparation process is thorough and defensible. A “tick-box” or outsourced approach is no longer sufficient.

The Reality of the ITR14

The ITR14 is no longer just a form—it is a declaration of a company’s tax integrity. What may seem like administrative details (e.g. classification of trading stock, prior year adjustments, or connected party disclosures) directly feed into SARS’s risk assessment algorithms.

SARS does not only assess the numbers. It evaluates the entire ecosystem around a return:

• Is the tax computation supported by a detailed tax pack?
• Are formal tax opinions in place for positions that may be challenged?
• Is the return reconciled to the annual financial statements?
• Have shareholding, group structures, and connected party relationships been fully and accurately disclosed?

Any inconsistency or omission could trigger an RFI or audit—and potentially lead to penalties or the disallowance of deductions and losses.

Building a Defensible ITR14 Process

To reduce the risk of disputes, companies and tax practitioners should adopt a proactive, structured approach. Key pillars of a robust submission strategy include:

1. Develop a Detailed Tax Pack

Every ITR14 should be accompanied by a comprehensive tax pack, including working papers, supporting schedules, deferred tax reconciliations, and explanations for complex items (e.g. capital gains, section 24C allowances, or IFRS adjustments).

2. Document Uncertain Tax Positions

Identify any positions that could be questioned by SARS and maintain a register of uncertain tax positions, supported by position papers or legal tax opinions where necessary.

3. Emphasise Non-Financial Disclosures

Non-financial information—such as shareholder data, group structures, and B-BBEE status—should not be treated as an afterthought. SARS uses this data in automated risk profiling, and inconsistencies with CIPC or the Beneficial Ownership register can trigger red flags.

4. Reconcile Carefully to Financial Statements

Ensure the ITR14 return aligns with your Annual Financial Statements (AFS). Discrepancies undermine credibility and increase audit risk.

5. Strengthen Communication and Review

External tax practitioners should clearly communicate that the taxpayer remains responsible for the accuracy of the return. Taxpayers must be involved in reviewing the tax pack and understanding any uncertain positions before submission.

Compliance as a Strategic Imperative

In today’s data-driven enforcement environment, tax risk isn’t just about what is declared—it’s about how it’s prepared. A well-resourced, professionally managed tax compliance process is not optional; it is a company’s first line of defense.

“A return is no longer just a declaration. It’s a target—if not prepared with care.”

To help navigate this complex environment, the upcoming webinar “ITR14 Challenges: Practical Solutions for Corporate Tax Issues” will offer expert insights, tools, and strategies to enhance your ITR14 submission process.

Learn more about how SARS is tightening its grip on corporate tax compliance—with increased audits and penalties linked to ITR14 errors—in our upcoming webinar. Register now to secure your spot.

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