Choose the right approach for your business
Navigating the complexities of tax compliance has become increasingly challenging for companies in South Africa. One of the most significant developments in recent years is the evolution of the ITR14 form used by companies. With constant changes in disclosure requirements, businesses are under pressure to adapt quickly and ensure their data is accurate and compliant. Having worked in the tax technology space for over 20 years, we’ve witnessed the remarkable transformation of the ITR14 form and the growing demands it places on companies.
This article explores the evolution of the ITR14 form and presents three approaches businesses can consider when preparing for its completion and submission.
Preparing for the ITR14: Three Approaches
Customising internal systems
One approach is to customise your internal systems to assist in managing new requirements of the ITR14 form. However, this can be time-consuming and costly, particularly for small to medium-sized businesses. Large organisations may dedicate specific resources to these projects, but smaller businesses often feel overwhelmed by the sheer complexity.
Customizing internal systems requires coordination between various departments, including IT, tax, and external consulting firms. The tax team is responsible for mapping out processes and identifying where critical information, such as shareholding and beneficial ownership details, is maintained. Unfortunately, traditional ERP systems are often designed for financial reporting rather than tax reporting. Even large organizations that attempt to customize and build automation into their systems for tax compliance often have low success rates.
Leveraging external software solutions
Another option is to use external software solutions to assist with preparation and submission of the ITR14. While this can streamline specific aspects of the process, it does not solve the underlying issue of data accuracy. Even the most sophisticated software will be ineffective if the data it relies on is not at the correct level of detail.
Companies choosing this route must ensure that the software has access to all the necessary data and that the data is at the correct level for the user to make informed tax decisions. Otherwise, they risk inaccurate reporting and incomplete disclosures, which could result in penalties and interest from SARS.
Manual reporting
Manual reporting is the third approach that some businesses may still use. While this might seem like a straightforward solution, it often leads to errors that can result in costly penalties and interest charges from SARS. Manual processes are prone to mistakes, and in a tax environment where accuracy is paramount, this approach is becoming increasingly risky.
How the ITR14 Has Evolved
The Income Tax Return for Companies (ITR14) has been modernised and enhanced to increase the quality of the taxpayer experience for companies. The main purpose of this modernisation initiative was to include questions to be completed on the first page of the return that will customise the contents of the ITR14 for completion by the Company Representative/Public Officer.
Complex large companies will have to complete and submit a more comprehensive return, and a simplistic small company will be required to complete a shortened and simplified return.
We have seen an increase in built-in validations, designed to minimize input errors. These validations help ensure that users select from predefined choices and follow a structured workflow.
Another significant development is the pre-population of specific fields in the ITR14. When a company requests the return for the first time, SARS automatically populates certain data fields. While some of these fields can be edited, others cannot particularly if SARS has already provided a value. Examples of pre-populated fields include share register information, SARS interest received, and allowances such as the 24C allowance. This feature helps companies save time and reduces the risk of data entry errors.
In 2022, SARS introduced new requirements around the disclosure of shareholdings. Companies must now submit information relating to the top three asset classes by value and the details of up to 20 shareholders per class of shares.
With the anticipated 2024 release of the ITR14, there will be updates to the existing Share Register section, as well as the introduction of a new section requiring detailed information on Beneficial Ownership.
Conclusion
Companies must adopt a strategic approach to managing their tax processes. Whether customising internal systems, using external software solutions, or avoiding manual completion altogether, businesses must ensure that their data is accurate, complete, and aligned with SARS requirements. By staying informed and proactive, companies can navigate the challenges of the ITR14.
