IT14SD – Company Income Tax Supplementary Declaration

By Trev Gami •  Updated: 01/23/24 •  5 min read

Before 16 September 2022, the South African Revenue Service (SARS) required businesses to submit the Supplementary Declaration for Companies or Close Corporations (IT14SD), but this is no longer the case. Instead, the IT14SD has been replaced by a letter that requests the necessary documents determined by the reason for verification. Read on to learn about IT14SD Company Income Tax Supplementary Declaration.    

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What Is an IT14SD?

Before it was removed on 16 September 2022, SARS issued an IT14SD form for verification, but now it issues a letter requesting specific documents for the same purpose. This means that SARS does not require the taxpayer to submit the IT14SD anymore. The IT14SD involved a detailed reconciliation between income tax, Pay-as-you-earn (PAYE), Value Added Tax (VAT), and customs declarations where applicable. However, this kind of reconciliation has been replaced by the new risk-specific letters. 

SARS requires taxpayers to provide signed annual financial statements, underlying tax schedules or supporting documentation, and detailed tax computations. If a taxpayer is selected for verification, they must meet this new standard process.  

For instance, SARS requires the taxpayer in a loss situation to provide reasons and details for the loss incurred. In the case of a refund, the taxpayer must furnish SARS with the reasons for provisional tax overpayment or why the discrepancies occurred. Regarding total expenses incurred by the taxpayer, SARS requires a detailed income statement. If expenses exceed 50%, the taxpayer should provide reasons why they are viewed as tax deductible. 

How to Submit an IT14SD Reconciliation

The completion and submission of the IT14SD were supposed to be done above the board to ensure that the input and output taxes were correctly entered and compliant. Reconciling the information on this form was time-consuming and complicated. The process required the following documentation: 

The submission of an IT14SD reconciliation involved the following steps: 

The taxpayer was supposed to divide their transactions into turnover and non-turnover and identify other issues. An analysis of the General Ledger accounts for turnover not included in VAT201s was supposed to be done, and all errors were explained.

To ensure compliance, the taxpayer was supposed to record all supplies on the VAT return including standard rate, exempt, zero rate, or non-supplies. The difference in turnover between AFS and VAT returns during the same period is related to exempt and non-supply income. In order to ensure a perfect reconciliation process, the taxpayer was supposed to accurately record and process all incomes or sales and purchases (expenses). All details were supposed to be captured on time.  

What Is the Meaning of SD in Income Tax?

Standard deduction (SD) is a term used in income tax to describe the portion of income that is not subject to tax. Commonly, SD is primarily used to reduce the taxpayer’s tax bill. You should know that the amount of your SD is determined by your filing status, age, disability, or you are dependent on one’s tax return. For instance, individuals who are 65 years or older and those who are disabled or blind are eligible to get a higher standard deduction. Those who claim as dependents are likely to get lower standard deductions. 

Is IT14SD Discontinued?

The IT14SD Supplementary Declaration for Companies or Close Corporations has been discontinued by SARS on 16 September 2022. In its place, taxpayers are supposed to provide a verification letter with the necessary supporting documents. The taxpayer needs to explain the verification reasons.

SARS previously issued an IT14SD for verification before it was banned. It involved a detailed reconciliation between income tax, PAYE, Value Added Tax (VAT), and customs declarations where relevant. However, this kind of reconciliation has been replaced by the new risk-specific letters. This means that taxpayers no longer need to complete the IT14SD form, which was seen as time-consuming and often complicated. However, the new verification letter must be accompanied by relevant documentation.    

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