How to complete the Return of Income: Exempt Organisations (IT12EI return) 2014

2014
How to complete the Return of
Income: Exempt Organisations
(IT12EI return)
DISCLAIMER
The information contained in this guide is intended as guidance only and is not considered to be a legal reference, nor is it a binding
ruling. The information does not take the place of legislation and readers who are in doubt regarding any aspect of the information
displayed in the guide should refer to the relevant legislation, or seek a formal opinion from a suitably qualified individual.
For more information about the contents of this publication you may:
• Visit the SARS website at www.sars.gov.za
• Visit your nearest SARS branch
• Contact your own tax advisor/tax practitioner
• If calling from within South Africa, contact the SARS Contact Centre on 0800 00 SARS (7277)
• If calling from outside South Africa, contact the SARS Contact Centre on +27 11 602 2093 (only between 8am and 4pm
South African time).
INTRODUCTION
All exempt organisations must submit annual income tax returns, despite the approval which may result in no
tax liability for the exempt organisation.
This guide is designed to help taxpayers to accurately complete income tax returns for exempt organisations.
For assistance contact the Tax Exemption Unit (TEU) on 012 422 8800 or [email protected].
Your attention is also drawn to the Interpretation Note 24 (issue 2) and Interpretation Note 46, which can be
accessed at www.sars.gov.za (Taxpayers > Exempt Organisations).
For companies, the return must be completed and submitted within 12 months after the financial year end of
the exempt organisation. For trusts or other entities, the return must be completed and submitted by the due
dates announced by SARS annually.
HOW TO OBTAIN A RETURN
•
Register online at www.sarsefiling.co.za to access, request and submit the return electronically;
•
Phone the SARS Contact Centre on 0800 00 SARS (7277);
•
Request a return by visiting the Tax Exemption Unit (TEU) office; or
•
Request a return by visiting your local SARS branch.
All returns requested from SARS through the SARS Branch, TEU, Contact Centre or post will be posted to
the taxpayer with the minimal information populated together with the tracking barcode.
HOW TO COMPLETE THE RETURN
•
The following information is applicable to manual submissions:
ú
Use a black or blue pen to complete the relevant fields of the return.
ú
Keep any writing within the spaces provided.
ú
Do not strike through the blocks that do not apply.
ú
Do not use correcting fluid if a mistake has been made.
ú
Do not fold the return as this will delay the process of assessing the return.
•
The following information is applicable to manual and eFiling submissions:
•
All relevant sections of the return must be completed. An incomplete return will be rejected and will be
marked as “Not submitted” until the completed return is received. This could result in penalties for the
late submission of the return.
•
The following fields on the return will be populated but cannot be changed:
ú
ú
ú
ú
ú
•
Registered Name
Trading Name
Company / Trust Registration Number
Date of Registration
Organisation Type.
Registered particulars of the taxpayer cannot be changed on the return. Changes to the registered
particulars must be effected at a SARS Branch or via eFiling by accessing the Registration,
Amendments and Verification (RAV01) form.
•
With the introduction of the Registration, Amendments and verification (RAV01) form, the demographic
fields on the IT12EI return will be pre-populated and locked. In other words, these details will not be
editable and the eFiler will be required to maintain demographic details under the “Maintain Legal
Entity Details” option.
•
The following pop-up message will be displayed to warn the eFiler that the demographics cannot be
changed on the form, when the form is opened:
“Please complete the registered details question on the first page before completing the return”.
Taxpayers/eFilers/Tax Practitioners must click the “OK” button to continue.
•
When the form is opened, Taxpayers/eFilers/Tax Practitioners can continue to answer the Registered
Details question and complete the return.
ú
ú
If the answer is “Yes”, then continue to complete the return.
If the answer “No”, then the following message will be displayed to the Taxpayers/eFilers/Tax
Practitioners: “The registered particulars cannot be changed on the return. Please save your return and use
the “Maintain Legal Entity Details” button on the eFiling work page to confirm or change your
details, or visit a SARS branch”.
Note: When Taxpayers/eFilers/Tax Practitioners go back to the first page of the IT12TR return, they
can then change the answer from ” No” to “Yes” in order to continue with the capturing of the return,
and the function buttons will be re-enabled.
If the answer to this question is changed from “Yes” to “No”, the following will be displayed:
“The registered particulars cannot be changed on the return. Please save your return and use the
“Maintain Legal Entity Details” button on the eFiling work page to confirm or change your details, or
visit a SARS branch”.
•
To complete a RAV01 form on eFiling/e@syfile, refer to the External Guide - GEN-ELEC-09-G01 How to complete the Registration Amendments and Verification ( RAV01) Form.
•
The following fields/sections on the return are mandatory:
ú
ú
ú
ú
ú
ú
ú
ú
ú
ú
Signature: The tax return is a legally binding declaration to identify all income received/accrued
and all income taxable in the hands of the organisation. An unsigned return is therefore not
acceptable and will be deemed to be outstanding. Returns submitted via the eFiling channel will
contain the digital signature of the user, which was created when the terms and conditions of
the eFiling registration were accepted;
The year of assessment (this version of the return can also be used when you are submitting a
return for prior years);
The tax reference number;
Particulars of organisation, including the following details:
o
Financial year-end;
o
Type of organisation;
o
Registered name;
o
Trade name;
o
Postal address;
o
Physical address;
o
Company/trust registration number; and
o
Date of registration.
Particulars of the person responsible for the return, including the following details:
o
Surname;
o
Initials;
o
Domicilium Citandi Et Executandi (address for legal purposes); o
Date of appointment of the representative taxpayer; o
Contact telephone number(s); o
Identity number; and o
Email address. General financial information;
Additional information;
Information in respect of trading activities;
Taxable income/loss; and
Tax deductible receipts issued in respect of donations (Section 18A).
•
All the relevant parts of the return MUST be completed. If no income/expenditure for a specific source
code is applicable, a zero must be indicated in the relevant field.
GETTING STARTED
•
Although the financial statements/financial information will be required to complete the income tax
return, NO documentation (other than those specifically requested) must be submitted with the return.
•
All documentation, however, must be retained by the taxpayer for a period of five years after
submission of the return in the event where SARS requests the information as part of an audit
investigation process.
•
Taxpayers are reminded that a signed return constitutes a legal declaration subject to the full recourse
of the law.
•
Where the current IT12EI return does not reflect the necessary fields for the declaration of income or
the provision of a specific deduction in the current year of assessment (which might be applicable to a
previous year of assessment), the relevant income/deduction must be shown under “Other” in the
applicable section of the return. A schedule must be prepared specifying the relevant components of
the income/deductions which comprise the information indicated under “Other”. This schedule must be
retained for a period of five years, after the date of the submission of the return; to be available should
SARS require it.
INFORMATION SUBMITTED
•
It is the responsibility of the taxpayer to ensure that all information disclosed on the income tax return
is accurate. In addition to possible prosecution and imposition of penalties prescribed by the Income
Tax Act for misrepresentation, neglect or omission to furnish such return or furnishing false
information, additional assessments (together with interest), may be raised after the expiry of three
years from the date of assessment. To avoid such occurrences and to facilitate a correct assessment
and an efficient income tax system, it is in everyone's interest that information furnished in the income
tax return is accurate and complete.
PENALTIES AND ADDITIONAL TAX
•
Any person in a fiduciary capacity responsible for the management or control of the income and
assets of an exempt organisation, who knowingly and deliberately fails to comply with the provisions of
the Act, or who has not utilised a donation for which a tax deductible receipt has been issued, for
carrying on the approved public benefit activities, may be guilty of an offence and on conviction liable
to a fine or imprisonment.
COMPLETION OF THE RETURN
SIGNATURE
•
The representative taxpayer is obliged to ensure that complete and accurate disclosure is made of all
relevant information as required on the income tax return. Misrepresentation, neglect or omission to
furnish such a return, or furnishing false information, may render a person liable to penalties and/or
additional assessments (together with interest) and/or prosecution.
•
Please note: If the return is not signed it will be returned and regarded as not having been received.
This could result in penalties for the late rendition of the return. (This is only applicable to manual
submissions)
•
If the organisation is registered for eFiling and the return is submitted electronically, a digital signature
that was created during registration as an eFiler will deem such return to be duly signed.
DETAILS RELATING TO THE ORGANISATION
•
Ensure that the following details are completed in the blocks provided:
ú
ú
Year of assessment; and Income tax reference number. DATE OF DECLARATION
•
Complete the date of declaration of the income tax return in the blocks provided.
PARTICULARS OF THE ORGANISATION
•
Ensure all the details relevant to the organisation are completed accurately and in full. This includes
the following:
ú
ú
ú
ú
ú
ú
ú
ú
Financial year end; Type of organisation; Registered name; Trade name; Postal address; Physical address; Company/trust registration number; and Date of registration. PARTICULARS OF PERSON RESPONSIBLE FOR THE RETURN
•
Ensure all the relevant details are completed accurately and in full. This includes the following:
ú
ú
ú
ú
ú
ú
ú
Surname; Initials; Domicilium Citandi Et Executandi (address for legal purposes); Date of appointment of the representative taxpayer; Contact telephone number(s); Identity number; and Email address. GENERAL FINANCIAL INFORMATION
•
It is important that all the applicable fields in this section are completed as the information in this
section is used during the assessment process.
•
The amounts to be used against each source code are the figures reflected in the annual financial
statements of the organisation.
•
Rental Income
The amount received as rental income includes amounts received from the letting of movable or
immovable property and accommodation.
•
Investment Income
Income received on the investment of funds of the organisation such as interest and dividends.
•
Donations
Provide the total amount received from foreign as well as local sources.
•
Membership fees
Provide the total amount received by way of membership fees or subscriptions.
•
Levies
Amounts received in respect of levy income.
•
Subsidies
Reflect all subsidies or grants received from Government or otherwise.
•
Proceeds from the disposal of assets
Provide the amount in respect of gross proceeds on disposal of capital asset(s) during the year of
assessment. (Immovable/ Fixed property and movable assets).
•
Other income not included above
State the amount received by/accrued to the organisation in respect of any source of income including
capital accruals/receipts and exempt income. This may include royalties, a bequest, income received
as beneficiary from a trust, income from fundraising activities.
•
Total expenditure of organisation
This is the total expenditure of the organisation incurred during the year of assessment.
ADDITIONAL INFORMATION
•
All the questions in this section must be completed. Where a question is answered in the affirmative, a
schedule must be prepared based on the information indicated below. The schedules must be
retained for a period of five years after the date of the submission of the return; to be available should
SARS require it.
•
Were any amendments effected to the founding document?
ú
ú
ú
•
Did any of the objectives or activities change during this year of assessment?
ú
•
Prepare a schedule listing the assets and/or reserves of the organisation.
Gross remuneration paid to office bearers
ú
ú
•
If the organisation is dormant, complete the relevant field and whether the organisation has
assets or reserves.
If dormant, does the organisation have any assets and/or reserves?
ú
•
Prepare a schedule listing the reason(s) for the audit qualification.
Is the organisation dormant?
ú
•
Prepare a schedule listing the changes in public benefit activities.
Audit report qualification?
ú
•
Please indicate whether any changes were made to the written document, under which the
organisation was established, such as the memorandum and articles of association, the
constitution or trust deed.
If any amendments were effected, you must inform the Tax Exemption Unit. Indicate if any of
the public benefit activities have changed during this year of assessment. This may have an
effect on the exempt status of the organisation.
Prepare a schedule listing the amendments that were effected to the founding document and
retain such schedule for a period of five years.
Gross remuneration paid to office bearer employees includes fees, salaries, bonuses, and the
value of any fringe benefit received, such as the use of assets (housing or motor vehicles), etc.
Prepare a schedule listing the total amount of remuneration paid to each office bearer.
Gross remuneration paid to employees:
ú
Prepare a schedule listing the total amount of remuneration paid to each employee.
INFORMATION IN RESPECT OF TAXABLE RECEIPTS
•
It is important that all the applicable fields in this section are completed because the information in this
section is used during the assessment process.
•
The amounts to be used are the figures reflected in the annual financial statements of the
organisation.
•
Total receipts and accruals subject to tax
ú
ú
•
Total receipts and accruals which are integral and directly related to the sole or principal object
ú
•
Total receipts and accruals from activities conducted on an irregular or infrequent basis or as a
special event.
Expenditure i.r.o. taxable receipts
ú
•
Total receipts and accruals from activities directly connected, linked and associated with the
approved public benefit activity (PBA) which is conducted by the PBO.
Total receipts and accruals from occasional trading activities including fund raising
ú
•
Total receipts and accruals from trading activities, excluding receipts and accruals of a capital
nature (see section on Capital Gain/Loss below).
Calculate and allow the basic exemption to determine amount subject to tax.
Total expenditure that relates to the generating of taxable receipts and accruals from trading
activities.
Expenditure i.r.o non-taxable income from trading activities
ú
Total expenditure that relates to the generating of non-taxable receipts and accruals from
trading activities.
TAXABLE INCOME/LOSS
•
It is important that all the applicable fields in this section are completed because the information in this
section is used during the assessment process.
•
The amounts to be used are the figures reflected in the annual financial statements of the
organisation.
•
When completing the relevant part of the return, the normal accounting meaning attached to the terms
reflected in the tax return must be followed.
•
Taxable Income/Loss From Non-Exempt (Trading) Activities
ú
ú
•
This amount is calculated by subtracting the total expenditure i.r.o the trading activities from the
total receipts and accruals which are subject to tax. A surplus will represent a taxable income
and a deficit will represent a loss.
Note: The following income codes must be used when the profit or loss is carried forward to the
relevant section on the income tax return:
o
Taxable income from trading activities - 3022
o
Loss from trading activities - 3023
Capital Gain/Loss from disposal of assets which do not qualify to be disregarded (Assets used
substantially for non-public benefit activities or in the production of non-exempt income)
ú
With effect from the first year of assessment commencing on or after 1 April 2006, PBOs are
subject to the provisions of CGT (capital gains tax). Any capital gain or loss made on disposal of
an asset which has mostly been used in the carrying on of non-public benefit activities or in the
production of non-exempt income, will not be disregarded for CGT purposes and will therefore
be taxed.
ú
However, any capital gain or loss made in respect of the disposal of the following categories of
assets must be disregarded:
o
Non-trading assets: This category refers to assets used exclusively for non-trade
purposes such as carrying on public benefit activities (PBAs) and assets held as
investment.
o
o
Minimal trading assets: This category includes assets, where substantially the whole of
the use of the asset by the PBO, on or after valuation date, was directed at a purpose
other than carrying on a business undertaking or trading activity (an asset used 90% of
the time for trading purposes).
Permissible trading assets: This category applies to assets where substantially the whole
of the use of the asset was directed at carrying on a business undertaking or trading
activity which qualifies for an exemption in terms of items (aa), (bb) or (cc) of Section
10(1)(cN)(ii).
ú
Detailed information relating to CGT can be found in the CGT Guides available on the SARS
website www.sars.gov.za.
ú
Note: The following capital gains tax codes must be used when the profit or loss is carried
forward to the relevant section on the income tax return:
o
Profit on disposal of capital asset - 4250
o
Loss on disposal of capital asset - 4251
TAX DEDUCTIBLE RECEIPTS ISSUED IN RESPECT OF DONATIONS (SECTION 18A)
•
This information must be completed by exempt organisations that have been approved in terms of
section 18A to issue tax-deductible receipts to donors.
•
Number of section 18A tax deductible receipts issued
ú
Indicate the exact number of receipts issued during the financial year.
•
Total rand value of donations for which section 18A tax deductible receipts were issued
ú
Indicate the exact rand amount of donations received for which section 18A receipts were
issued.
•
Were funds expended on both section 18A and non section 18A approved activities?
ú
Answer “Yes” or “No”.
•
If YES, do you have the required audit certificates?
ú
Answer “Yes” or “No”.
•
If the fund is approved i.t.o. section 18A(1)(b), did you comply with the requirements to
distribute 75% of the donations received for which tax deductible receipts were issued.
ú
Prepare a schedule indicating the distribution of 75% of the donations received for which tax
deductible receipts were issued.
•
Please refer to the List of Section 18A approved organisations which can be accessed at
www.sars.gov.za (Taxpayers > Exempt Organisations).
HOW TO SUBMIT THE IT12EI RETURN
ELECTRONICALLY
•
Register the organisation for eFiling in order to receive, complete and submit the return electronically.
DROP OFF
•
All SARS branches have drop boxes where the completed return can be deposited or delivered to:
Tax Exemption Unit – SARS
Land Bank Building
271 Vealle street
Brooklyn
0181
POST
•
Post the completed return to:
Tax Exemption Unit - SARS
P O Box 11955
Hatfield
0028
ANNEXURE A
TEMPLATE FOR ANNUAL FINANCIAL STATEMENTS – BALANCE SHEET INFORMATION
ASSETS
Non-Current Assets
Fixed Property
Fixed Assets (Machinery and equipment)
Fixed Assets – Other
Goodwill and Intellectual Property
Investments
Long term loans
Deferred tax asset
Other non-current assets
Current Assets
Inventory and work in progress (net after provisions)
Trade and other receivables (net after provisions)
Short-term investments
Cash and cash equivalents
Other current assets (specify in a separate
schedule)
TOTAL ASSETS
EQUITY
Capital and Reserves
Share Capital
Share premium
Non-distributable reserves
Distributable reserves (excluding retained profit /
accumulated loss)
Retained profit / loss
Other capital and reserves (specify in a separate
schedule)
Non-Current Liabilities
Long-term loans
Deferred tax liability
Other non-current liabilities (specify in a separate
schedule)
Current Liabilities
Trade and other payables (including accruals)
Provisions - excluding inventory and trade
receivables
Deposits and funds received in advance
Overdraft and interest bearing short-term
borrowings
Shareholders for dividend / proposed dividend
Other current liabilities (specify in a separate
schedule)
TOTAL EQUITY
ANNEXURE B
TEMPLATE FOR ANNUAL FINANCIAL STATEMENTS – INCOME STATEMENT INFORMATION
GROSS PROFIT / LOSS
Sales
Cost of Sales
Inventory adjustments (write-off reversed)
Inventory adjustments (write-off of obsolete and slowmoving stock)
Gross Profit/Loss
Income Items
Administration, management, secretarial fees and
rentals
Bad and doubtful debts recovered
Commission
Dividends
Foreign exchange gain
Interest
Accounting profit on disposal of fixed assets and / or
other assets
Gross royalties and licence fees
Extraordinary / Abnormal items (increases income)
Other income (specify in a separate schedule)
Expense Items
Administration, management, secretarial fees and
rentals
Alterations and improvements (excluding repairs
and maintenance)
Compensation for loss of office
Consulting, legal and professional fees
Provision for doubtful debts
Bad debts written off
Commission
Depreciation
Directors’ / members’ remuneration
Donations (sec. 18A)
Entertainment
Foreign exchange loss
Interest
Lease payments (operating lease)
Accounting loss on disposal of fixed assets and / or
other assets
Medical fund contributions
Pension and provident fund contributions
Research and development costs
Restraint of trade
Repairs and maintenance
Royalties and licence fees (gross)
Salaries and wages (excluding medical-, pensionand provident fund contributions)
Travelling local / foreign
Extraordinary / Abnormal items (decreases income)
Other (specify in a separate schedule)
NET PROFIT / LOSS
How to complete the Return of Income: Exempt Organisations (IT12EI return)