IRP6 vs. ITR14: What’s the Difference and Why It Matters for Your Business

Tax compliance is a crucial aspect of running a business in South Africa. Understanding the different tax returns and filing them correctly can help businesses avoid penalties and maintain good standing with the South African Revenue Service (SARS). Two key tax returns that businesses must be aware of are the IRP6 and ITR14. This article breaks down the differences between these returns, highlights common mistakes to avoid, and provides a step-by-step guide for first-time filers.

Understanding the IRP6 and ITR14 Returns

What is the IRP6 Return?

The IRP6 return is the Provisional Tax Return that businesses and individuals submit to SARS to declare and pay provisional tax. Provisional tax is paid in advance and helps businesses spread their tax liability across the year.

• Who Needs to File?
  • Companies
  • Self-employed individuals
  • Small businesses and freelancers
• Filing Frequency:
  • Two mandatory payments: 1st period (six months into the financial year) and 2nd period (at year-end).
  • Optional 3rd payment to avoid underestimation penalties.
• Purpose:
  • Ensures businesses pay tax in advance rather than in one lump sum at year-end.
  • Helps SARS estimate the taxpayer’s annual taxable income.

What is the ITR14 Return?

The ITR14 return is the Annual Income Tax Return for Companies that all registered businesses must file at the end of their financial year. It provides SARS with a full financial overview of the company, including income, expenses, and deductions.

• Who Needs to File?
  • All companies registered with CIPC
  • Private and public companies
  • Non-profits (where applicable)
• Filing Frequency:
  • Annually, within 12 months after the company’s financial year-end.
• Purpose:
  • Assesses the company’s final taxable income for the year.
  • Determines whether additional tax is owed or if a refund is due.

Common Mistakes to Avoid

Filing tax returns can be complex, and many businesses make errors that can lead to penalties or unnecessary audits. Here are common mistakes to avoid:

1. Incorrect Income Estimation (IRP6) – Underestimating taxable income can result in penalties, while overestimating can lead to cash flow issues.
2. Late Submissions – Both IRP6 and ITR14 have strict deadlines. Missing them results in penalties and interest charges.
3. Failure to File the ITR14 – Some businesses assume that filing the IRP6 is enough, but they must also file the ITR14 to finalize their tax position.
4. Incomplete or Inaccurate Information – Inconsistencies in financial details can trigger audits or additional assessments by SARS.
5. Not Keeping Supporting Documents – Businesses should retain invoices, bank statements, and financial reports to support their tax filings in case of an audit.

Step-by-Step Guide for First-Time Filers

Filing the IRP6 (Provisional Tax Return)

1. Log in to eFiling
   • Visit the SARS eFiling website and log into your account.
2. Navigate to Provisional Tax Returns
   • Select “Returns” > “Provisional Tax (IRP6)”.
3. Complete the Return
   • Enter estimated taxable income, tax credits, and relevant deductions.
4. Verify and Submit
   • Double-check all details before submitting.
5. Make Payment
   • If tax is due, pay via EFT or direct SARS payment options.

Filing the ITR14 (Company Tax Return)

1. Prepare Financial Statements
   • Ensure financials are reviewed by an accountant.
2. Log in to eFiling
   • Access your company profile on SARS eFiling.
3. Select the ITR14 Return
   • Navigate to “Income Tax” > “ITR14”.
4. Complete the Return
   • Enter company details, financials, and deductions.
5. Upload Supporting Documents
   • Submit financial statements and other required files.
6. Verify and Submit
   • Double-check for errors and submit the return.
7. Await Assessment and Pay Tax Due
   • SARS will process your return and issue an assessment.

Final Thoughts

Understanding the differences between IRP6 and ITR14 is essential for every business owner. The IRP6 helps businesses manage provisional tax payments, while the ITR14 finalizes the company’s tax position annually. By avoiding common filing mistakes and following the correct steps, businesses can ensure smooth tax compliance and avoid penalties. If you need expert assistance, consider consulting a professional accountant or tax consultant to ensure your tax affairs are in order.