Take note! Business Tax Form IT14SD
SD Management Consultants
SARS is currently using its IT14SD business tax form more aggressively as a verification and compliance tool in order to reconcile items declared in the annual financial statements to returns submitted to SARS during the year. These returns cover PAYE, VAT, customs duty and income tax.
How it works is that once the initial IT14 (tax return) has been submitted SARS identifies an organization for verification (currently only companies and close corporations). Once identified an IT14SD is issued to the entity and has to be completed within 21 calendar days.
The following reconciliation schedules are required to be submitted:
The totals submitted on the IRP5 certificates for all employees including directors remuneration, medical, pension and provident funds contributions, salaries and wages and other employment costs are reconciled to total employment costs in the entities financial statements.
Turnover as per the financial statements must be reconciled with the output VAT as reflected in the submitted VAT returns. Input VAT must also be reconciled.
3. Customs duties
The totals of imported and exported goods as declared on the income tax return must be reconciled to the returns issued.
4. Income tax
The income/loss as per the income tax return must be reconciled to the accounting profit or loss as per the financial statements.
Any differences of over R100 must be reconciled and the details submitted to SARS.
For companies that require auditing or independent review please note that these reconciliations will only be tested for reasonability and compliance with legislation. Unless there are material differences, the auditor or reviewer is not required to resolve any differences. It would remain the company’s responsibility to supply explanations should the company be selected for verification.
As for compilation engagements for close corporations, unless we are specifically requested to do so, it would remain the corporation’s responsibility to do these reconciliations and to supply explanations should the corporation be selected for verification.
Failure to reconcile will result in the imposition of additional taxes and penalties and possibly a full scale audit by SARS.
Should you have any queries or require assistance please do not hesitate to contact us in this regard.