What is IT14SD and Why is it Important?

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IT14SD is an additional declaration after submitting your normal Corporation Income tax return where SARS is asking you (as the director), or the accountant, to reconcile all SARS submissions for the accounting period to the corporation tax return and explain reconciling differences.

This means that the return attempts to reconcile:

  • VAT201 returns submitted

  • EMP201 returns submitted 

  • Import and Export declarations

  • The Corporation tax return submitted

Any reconciling of items should be explained and supporting documentation provided. This does not mean that the purpose of the declaration is to ensure that there should be no reconciling differences. There can be a difference especially if the VAT periods are not in line with the financial year end, or when sales at 0% VAT were invoiced.

Preparing the declaration is not a difficult exercise if the accounting records and the SARS submissions were reconciled regularly during the financial year.  When the financial statements where prepared, the possibility of a request from SARS for an IT14SD is considered and the necessary schedules are prepared, and explanations obtained. 

Our experience is that the IT14SD declaration is a way to ensure that the client is tax compliant and that no additional requests or surprises jump up from SARS. It forces us to identify areas where SARS might have questions and we can answer the queries when the declaration is submitted.

One of the negative aspects with the IT14SD declaration is the additional administrative burden it puts on us and the client to ensure the declaration is accurate. Because these declarations are an in-depth understanding of the company’s business and transactions, we do suggest that this declaration is done by someone with expertise and understands how to complete this return. 

Some of the reasons for reconciliation differences that might arise when preparing an IT14SD are:

  • Timing differences between VAT period end dates and financial statement preparation dates.

  • Fixed assets bought that have VAT consequences but not accounted for in the profit and loss.

  • Import and export Sales or Cost of Sales.

  • Sales that have 0% VAT applicable.

  • Bonuses and fringe benefits provided to staff or tax-free benefits.

  • Certain expenses do not have VAT consequences and should be identified as a non-vatable item.

  • Donations made to charities.

  • Directors emoluments

  • Etc.

The more complex an organisation is, the more important it becomes to ensure that a qualified accountant with knowledge of these types of declarations is appointed to submit the IT14SD.

It is also important to put internal controls and systems in place to ensure that the chart of accounts is set up the report on the required fields i.e.

  • Directors remuneration is disclosed separately

  • UIF is accounted for in a separate account

  • Significant expense items like advertising is split between VAT and non-VAT transactions.

This will ensure that when the IT14SD declaration is prepared that the necessary information can be obtained easily. The declaration also needs to be filed within 21 days and it is important to file the return on time otherwise it can lead to penalties.

It is also important to note that if there is an error identified after submission of the IT14SD, the only way to correct the tax years return, is to do a formal objection. This means it is better to get the declaration submitted accurately the first time to avoid additional work.

When an IT14SD is received from SARS, and an error is identified, the corporation tax return can be resubmitted as well as the IT14SD. If SARS however identifies an error after an IT14SD is submitted, there are various actions that can be taken by SARS depending on the difference identified.