it-ae-36-g01 - quick guide on how to complete the it12ei return for exempt organisations - external...

7/24/2019 IT-AE-36-G01 - Quick Guide on How to Complete the IT12EI Return for Exempt Organisations - External Guide

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How to complete the Return ofIncome: Exempt Organisations

(IT12EI return)

2014


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DISCLAIMERThe information contained in this guide is intended as guidance only and is not considered to be a legal reference, nor is it a bindingruling. The information does not take the place of legislation and readers who are in doubt regarding any aspect of the informationdisplayed 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).


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INTRODUCTION

All exempt organisations must submit annual income tax returns, despite the approval which may result in notax 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 beaccessed 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 ofthe exempt organisation. For trusts or other entities, the return must be completed and submitted by the duedates announced by SARS annually.

HOW TO OBTAIN A RETURN

Register online at www.sarsefiling.co.zato 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 tothe taxpayer with the minimal information populated together with the tracking barcode.

HOW TO COMPLETE THE RETURN

The following information is applicable to manual submissions:

! Use a black or blue pen to complete the relevant fields of the return.

! Keep any writing within the spaces provided.

! Do not strike through the blocks that do not apply.

! Do not use correcting fluid if a mistake has been made.

! 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 bemarked as Not submitted until the completed return is received. This could result in penalties for thelate submission of the return.

The following fields on the return will be populated but cannot be changed:

! 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 registeredparticulars must be effected at a SARS Branch or via eFiling by accessing the Registration,

Amendments and Verification (RAV01) form.


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With the introduction of the Registration, Amendments and verification (RAV01) form, the demographicfields on the IT12EIreturn will be pre-populated and locked. In other words, these details will not beeditable and the eFiler will be required to maintain demographic details under the Maintain LegalEntity Details option.

The following pop-up message will be displayed to warn the eFiler that the demographics cannot bechanged 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 RegisteredDetails question and complete the return.

! 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 usethe Maintain Legal Entity Details button on the eFiling work page to confirm or change yourdetails, 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 theMaintain Legal Entity Details button on the eFiling work page to confirm or change your details, orvisit 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:

! Signature: The tax return is a legally binding declaration to identify all income received/accruedand all income taxable in the hands of the organisation. An unsigned return is therefore notacceptable and will be deemed to be outstanding. Returns submitted via the eFiling channel willcontain the digital signature of the user, which was created when the terms and conditions ofthe eFiling registration were accepted;

! The year of assessment(thisversion of the return can also be used when you are submitting areturn 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; ando Date of registration.

! Particulars of the person responsible for the return, including the following details:o Surname;o Initials;o !"#$%$&$'# )$*+,-$ .* ./0%'*+,-$"#$$%&'' ()% *&+#* ,-%,)'&'./

o 0#1& )( #,,)2314&31 )( 15& %&,%&'&31#126& 1#7,#8&%/

o 9)31#:1 1&*&,5)3& 3-4;&%"'./o !

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).


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All the relevant parts of the return MUST be completed. If no income/expenditure for a specific sourcecode 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 taxreturn, 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 aftersubmission of the return in the event where SARS requests the information as part of an auditinvestigation process.

Taxpayers are reminded that a signed return constitutes a legal declaration subject to the full recourseof the law.

Where the current IT12EI return does not reflect the necessary fields for the declaration of income orthe provision of a specific deduction in the current year of assessment (which might be applicable to aprevious year of assessment), the relevant income/deduction must be shown under Other in theapplicable section of the return. A schedule must be prepared specifying the relevant components ofthe 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 shouldSARS require it.

INFORMATION SUBMITTED

It is the responsibility of the taxpayer to ensure that all information disclosed on the income tax returnis accurate. In addition to possible prosecution and imposition of penalties prescribed by the IncomeTax Act for misrepresentation, neglect or omission to furnish such return or furnishing falseinformation, additional assessments (together with interest), may be raised after the expiry of threeyears from the date of assessment. To avoid such occurrences and to facilitate a correct assessmentand an efficient income tax system, it is in everyone's interest that information furnished in the incometax return is accurate and complete.

PENALTIES AND ADDITIONAL TAX

Any person in a fiduciary capacity responsible for the management or control of the income andassets of an exempt organisation, who knowingly and deliberately fails to comply with the provisions ofthe Act, or who has not utilised a donation for which a tax deductible receipt has been issued, forcarrying on the approved public benefit activities, may be guilty of an offence and on conviction liableto a fine or imprisonment.

COMPLETION OF THE RETURN

SIGNATURE

The representative taxpayer is obliged to ensure that complete and accurate disclosure is made of allrelevant information as required on the income tax return. Misrepresentation, neglect or omission tofurnish such a return, or furnishing false information, may render a person liable to penalties and/oradditional 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 manualsubmissions)

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:


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! ?% )( #''&''4&31/ #3$

!

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 includesthe following:

! @23#3:2#* 8% &3$/

! A8,& )( )%+#32'#12)3/! B&+2'1&%&$ 3#4&/

! A%#$& 3#4&/! C)'1#* #$$%&''/! C58'2:#* #$$%&''/

! 9)4,#38D1%-'1 %&+2'1%#12)3 3-4;&%/ #3$

! 0#1& )( %&+2'1%#12)3>

PARTICULARS OF PERSON RESPONSIBLE FOR THE RETURN

Ensure all the relevant details are completed accurately and in full. This includes the following:

! E-%3#4&/

!


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Proceeds from the disposal of assetsProvide the amount in respect of gross proceeds on disposal of capital asset(s) during the year ofassessment. (Immovable/ Fixed property and movable assets).

Other income not included aboveState the amount received by/accrued to the organisation in respect of any source of income includingcapital accruals/receipts and exempt income. This may include royalties, a bequest, income receivedas beneficiary from a trust, income from fundraising activities.

Total expenditure of organisationThis 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, aschedule must be prepared based on the information indicated below. The schedules must beretained for a period of five years after the date of the submission of the return; to be available shouldSARS require it.

Were any amendments effected to the founding document?

! Please indicate whether any changes were made to the written document, under which theorganisation was established, such as the memorandum and articles of association, theconstitution or trust deed.

! If any amendments were effected, you must inform the Tax Exemption Unit. Indicate if any ofthe public benefit activities have changed during this year of assessment. This may have aneffect on the exempt status of the organisation.

! Prepare a schedule listing the amendments that were effected to the founding document andretain such schedule for a period of five years.

Did any of the objectives or activities change during this year of assessment?

! Prepare a schedule listing the changes in public benefit activities.

Audit report qualification?

! Prepare a schedule listing the reason(s) for the audit qualification.

Is the organisation dormant?

! If the organisation is dormant, complete the relevant field and whether the organisation hasassets or reserves.

If dormant, does the organisation have any assets and/or reserves?

! Prepare a schedule listing the assets and/or reserves of the organisation.

Gross remuneration paid to office bearers

! Gross remuneration paid to office bearer employees includes fees, salaries, bonuses, and thevalue 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:

! 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 thissection is used during the assessment process.

The amounts to be used are the figures reflected in the annual financial statements of the


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organisation.

Total receipts and accruals subject to tax

! Total receipts and accruals from trading activities, excluding receipts and accruals of a capitalnature (see section on Capital Gain/Loss below).

! Calculate and allow the basic exemption to determine amount subject to tax.

Total receipts and accruals which are integral and directly related to the sole or principal object

! Total receipts and accruals from activities directly connected, linked and associated with theapproved public benefit activity (PBA) which is conducted by the PBO.

Total receipts and accruals from occasional trading activities including fund raising

! Total receipts and accruals from activities conducted on an irregular or infrequent basis or as aspecial event.

Expenditure i.r.o. taxable receipts

! 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

! Total expenditure that relates to the generating of non-taxable receipts and accruals fromtrading activities.

TAXABLE INCOME/LOSS

It is important that all the applicable fields in this section are completed because the information in thissection is used during the assessment process.

The amounts to be used are the figures reflected in the annual financial statements of theorganisation.

When completing the relevant part of the return, the normal accounting meaning attached to the termsreflected in the tax return must be followed.

Taxable Income/Loss From Non-Exempt (Trading) Activities

! This amount is calculated by subtracting the total expenditure i.r.o the trading activities from thetotal receipts and accruals which are subject to tax. A surplus will represent a taxable incomeand a deficit will represent a loss.

! Note: The following income codes must be used when the profit or loss is carried forward to therelevant section on the income tax return:o Taxable income from trading activities - 3022o Loss from trading activities - 3023

Capital Gain/Loss from disposal of assets which do not qualify to be disregarded (Assets usedsubstantially for non-public benefit activities or in the production of non-exempt income)

! With effect from the first year of assessment commencing on or after 1 April 2006, PBOs aresubject to the provisions of CGT (capital gains tax). Any capital gain or loss made on disposal ofan asset which has mostly been used in the carrying on of non-public benefit activities or in theproduction of non-exempt income, will not be disregarded for CGT purposes and will thereforebe taxed.

! 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-tradepurposes such as carrying on public benefit activities (PBAs) and assets held asinvestment.


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o Minimal trading assets: This category includes assets, where substantially the whole ofthe use of the asset by the PBO, on or after valuation date, was directed at a purposeother than carrying on a business undertaking or trading activity (an asset used 90% ofthe time for trading purposes).

o Permissible trading assets: This category applies to assets where substantially the wholeof the use of the asset was directed at carrying on a business undertaking or tradingactivity which qualifies for an exemption in terms of items (aa), (bb) or (cc) of Section10(1)(cN)(ii).

! Detailed information relating to CGT can be found in the CGT Guides available on the SARSwebsite www.sars.gov.za.

! Note: The following capital gains tax codes must be used when the profit or loss is carriedforward to the relevant section on the income tax return:o Profit on disposal of capital asset - 4250o 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

! 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

! Indicate the exact rand amount of donations received for which section 18A receipts wereissued.

Were funds expended on both section 18A and non section 18A approved activities?

! Answer Yes or No.

If YES, do you have the required audit certificates?

! Answer Yes or No.

If the fund is approved i.t.o. section 18A(1)(b), did you comply with the requirements todistribute 75% of the donations received for which tax deductible receipts were issued.

! Prepare a schedule indicating the distribution of 75% of the donations received for which taxdeductible receipts were issued.

Please refer to the List of Section 18A approved organisations which can be accessed atwww.sars.gov.za (Taxpayers > Exempt Organisations).


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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 SARSLand Bank Building271 Vealle streetBrooklyn0181

POST

Post the completed return to:

Tax Exemption Unit - SARSP O Box 11955Hatfield0028


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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 separateschedule)

TOTAL ASSETSEQUITY

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 separateschedule)

Non-Current Liabilities

Long-term loansDeferred tax liability

Other non-current liabilities (specify in a separateschedule)

Current Liabilities

Trade and other payables (including accruals)

Provisions - excluding inventory and tradereceivables

Deposits and funds received in advance

Overdraft and interest bearing short-termborrowings

Shareholders for dividend / proposed dividend

Other current liabilities (specify in a separate

schedule)TOTAL EQUITY


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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 slow-moving stock)

Gross Profit/Loss

Income Items

Administration, management, secretarial fees andrentals

Bad and doubtful debts recovered

Commission

Dividends

Foreign exchange gain

Interest

Accounting profit on disposal of fixed assets and / orother assets

Gross royalties and licence feesExtraordinary / Abnormal items (increases income)

Other income (specify in a separate schedule)

Expense Items

Administration, management, secretarial fees andrentals

Alterations and improvements (excluding repairsand 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 / orother assets

Medical fund contributions

Pension and provident fund contributions

Research and development costs

Restraint of tradeRepairs and maintenance

Royalties and licence fees (gross)

Salaries and wages (excluding medical-, pension-and provident fund contributions)

Travelling local / foreign

Extraordinary / Abnormal items (decreases income)

Other (specify in a separate schedule)

NET PROFIT / LOSS


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

it-ae-36-g01 - quick guide on how to complete the it12ei return for exempt organisations - external...

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