Company Tax returns for dormant companies

There is a common belief among business owners, that when a company is dormant, i.e did not trade for a specific financial year, that you do not need to submit a tax return.

This is not true, a company has to submit a tax return whether it has traded or not. SARS will still hold a dormant company liable for a return, even if the company is dormant. And this can lead to penalties being raised, usually at R250 per month for every return not submitted.

The following is an extraxt is from SAIT(South African Institute for Tax professionals)

1. Believing you do not need to submit an ITR14 for a dormant or loss-making company

There is a misconception that if a business is not trading or is generating losses it does not need to submit an ITR14, but this is not the case. It is a legal requirement for all registered companies to submit a company tax return on an annual basis, within 12 months after the year end of the company, even if they are generating losses or are dormant.

If the latter is the case, simply tick the block in the opening wizard of the tax return that indicates the company is dormant and this will result in a summarised version of the tax return being generated. Note, however, that if the company is dormant and has assets and/or liabilities, the Balance Sheet section of the return must still be completed.

In order to remain compliant with SARS, it is imperative that a company files a tax return every single year, thereby ensuring an unbroken filing history from the time it is registered.

dormant company tax return

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