Corporate Tax Compliance
Most SARS queries begin in the same place: a tax computation that cannot be reconciled to the financial statements. When the computation is maintained in a spreadsheet alongside the accounts rather than derived from them, the two drift, and the difference is exactly what a verification request asks about. We build the computation from the records and keep the reconciliation as a working paper.
1
Reconcile
Accounts to computation
2
Adjust
Permanent and timing
3
Compute
Current and deferred
4
Submit
Provisional and annual
5
Support
Queries and assessments
How We Work
01
Reconciliation to the Financial Statements
The computation starts from accounting profit and every adjustment is traceable. Where a figure in the return cannot be traced to the statements, that is the figure SARS will ask about.
- Computation built from audited or reviewed profit
- Every adjustment supported and referenced
- Reconciliation retained as a working paper
- Prior year assessed position agreed to the return
02
Adjustments and Allowances
Permanent differences, timing differences and the allowances that are routinely missed. Capital allowances in particular are frequently under claimed because the asset register and the tax register are maintained separately.
- Non deductible expenditure identified and adjusted
- Capital allowances claimed against the asset register
- Assessed loss position tracked and carried forward
- Special allowances assessed for eligibility
03
Current and Deferred Tax
Both, reconciled to each other. Deferred tax is one of the most commonly misstated figures in smaller sets of statements because it is rolled forward rather than recalculated from the temporary differences.
- Current tax charge calculated and supported
- Deferred tax recalculated from temporary differences
- Movement reconciled rather than carried forward
- Tax rate reconciliation prepared for disclosure
04
Provisional and Annual Returns
Provisional estimates prepared on a defensible basis rather than a repeat of last year. Under estimation attracts penalties, and over estimation lends SARS money at no interest.
- First and second provisional estimates prepared
- Basis for each estimate documented
- Annual return prepared and submitted
- Submission deadlines tracked and met
05
Assessment Review and Query Support
Assessments are checked against the return rather than filed on receipt. Where SARS has adjusted something, the window to object is short and starts running immediately.
- Assessment agreed to the submitted return
- Differences investigated before the objection window closes
- Verification requests responded to with supporting documents
- Statement of account reconciled periodically
What You Receive
- Tax computation reconciled to the financial statements
- Supporting schedules for every adjustment
- Capital allowance schedule agreed to the asset register
- Provisional and annual returns submitted
- Assessment review against the submitted return
- Responses to SARS verification requests
Indicative Timeline
The compliance cycle follows statutory dates rather than preference. Provisional returns fall at six months and year end, with the annual return due within the prescribed period after year end.
- First provisional: six months into the financial year
- Second provisional: at financial year end
- Annual return: within the prescribed period after year end
- Assessment review: on receipt, inside the objection window
What Compliance Covers
The annual cycle, plus the assessment and query work that follows it.
Provisional Tax
First and second estimates prepared on a documented basis, with the penalty exposure managed.
Annual Return
The income tax return prepared from the records and reconciled to the financial statements.
Capital Allowances
Wear and tear and building allowances claimed against an asset register rather than estimated.
Deferred Tax
Recalculated from temporary differences and reconciled, not rolled forward from last year.
Assessments
Checked against the return, with differences raised inside the objection window.
Registration
Registration, deregistration and changes to registered particulars with SARS.
Frequently Asked Questions
Why does our tax computation never agree to the accounts?
Usually because it is maintained separately and rolled forward rather than rebuilt from the year figures. Once the two drift they stay drifted, and the difference is the first thing a verification request examines.
How are provisional estimates supposed to be calculated?
On a reasonable basis reflecting expected taxable income, documented at the time. Repeating last year figure is common and it is exactly what attracts an underestimation penalty when the year turns out differently.
We have an assessed loss. Does that change anything?
You still submit returns, and the loss must be tracked and carried forward correctly. Losses are also subject to rules that can restrict utilisation, so the carried forward balance needs supporting rather than assuming.
What happens if SARS raises a verification?
We respond with the supporting documentation. Verifications are routine rather than accusatory, and a well documented computation with schedules behind it usually resolves them quickly.
Can you deal with prior year returns we never filed?
Yes. Outstanding returns should be brought up to date before SARS raises estimated assessments, which are almost always worse than the actual position. Where penalties have accrued there may be relief available.
Should the same firm do our tax and our assurance work?
Where the same firm prepares a tax computation and also provides assurance over the statements it feeds, that can create a self review threat depending on materiality. Where we are separately engaged to review or report on the same figures, we would flag the constraint rather than take both without discussion.
Related Services
This sits inside our Taxation practice. Related work: Annual Financial Statements, which the computation reconciles to, and Fixed Asset Register Management for the register capital allowances are claimed against.
