|South Africa Issues Guide on Accounting Periods|
The South African Revenue Service (SARS) has issued an interpretation note that confirms taxpayers who cannot conveniently return their annual income from a business or profession to the last day of February may apply for permission to draw up accounts to another closing date.
The note deals primarily with natural persons and trusts carrying on a trade. Natural persons and trusts normally have a statutory year of assessment for a period running from March 1 one year to the last day of February of the succeeding year.
However, SARS confirmed that the South African tax code provides relief for taxpayers who find it inconvenient to render annual accounts for business income derived during a period ending on the last day of February.
SARS may approve an application to draw such accounts to a date other than the last day of February if it is satisfied that the whole or some portion of a taxpayer's income cannot be conveniently returned for a year of assessment, subject to any conditions that the tax agency may impose.
The taxpayer is not required to apportion any income. The approved closing accounting date will determine into which year of assessment the results for the accounting period must be included, and the dates on which provisional tax payments must be made.
Accounts covering up to the end of September will be subject to tax in the year of assessment ending on the last day of February of the same year, and accounts covering after September of one year will be granted on the basis that the income will be subject to tax in the next year of assessment.
Approval to submit accounts to a date other than the last day of February is limited to taxable income derived from a business or profession. SARS will not permit taxpayers to draw up their returns for a period other than the statutory year of assessment for any other income, such as remuneration, interest, rentals, royalties, and dividends.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Feb.22, 2016