It seems that dormant companies are on SARS' radar.
If you registered a company with CIPC some time ago and forgot about it, that company could land you in hot water with SARS. Read more to find out what the financial repercussions could be and why you should get a hold on the situation.
A dormant company is classified as a company that has not actively traded for the full year of assessment. Because there is no activity in the company, it's easy to forget about it completely along with all red tape that goes with it. However, think of this as having a hot pot on the stove and walking away – it’s bound to leave a mess.
SARS have recently become a lot stricter about levying administrative penalties for non-submission and late submission of company tax returns (even if the company is dormant) and these penalties will continue to re-occur on a monthly basis until the submission of the tax returns.
So, if you’re director of a company or the public officer of a dormant company, you still have a duty to submit the company's tax returns to SARS.
When a company de-registers with the Companies and Intellectual Property Commission (CIPC), it implies the company is no longer registered and has no legal standing since it’s not doing any business nor has any assets or liabilities.
When a company de-registers with SARS, it will have no further tax obligations.
If you don't intend to trade through your company, it would be advisable to de-register with both CIPC and SARS as soon as possible to avoid further administrative penalties.
A company can be de-registered either automatically by failing to file its annual returns with CIPC, or manually by referring the company for de-registration to the Companies and Intellectual Property Commission (CIPC).
To de-register, the members must write a letter to CIPC (on the company letterhead) stating that the company is dormant, and has no assets, nor liabilities and all the members intend to de-register the company, please see the relevant link here
Many taxpayers think that if the company de-registers with CIPC, it will automatically de-register with SARS. This is not the case. Steps must be followed to de-register with SARS as explained below.
You will need notify SARS that the tax returns are up to date (tax compliant) and to de-register the company from their system. It is important to note that SARS will not de-register the company from their side until the company is tax compliant.
You can do this by:
1) sending SARS a letter (contactus@sars.gov.za) requesting them to de-register the company. The letter you sent the CIPC should be sufficient and the reply from the CIPC confirming the company is de-registered needs to accompany this request or,
2) you can de-register it yourself via the "Maintain SARS registered details" tab on eFiling by following these steps: Log into your eFiling profile, click on "Organisation", click "SARS Registered Details", "Maintain SARS Registered Details", click "Proceed" and then select "My Tax Products", select the Income tax number, click on it in the middle of the page, scroll down and click on "Deactivate", then click "Done" and "Submit Form". or,
3) If you want to speak to a SARS consultant instead, you can setup an appointment with SARS. Please click here to make an appointment at a time that suits you best. SARS will then supply you with a case number. Before the appointment, you must submit your supporting documents to SARS using this link here. The supporting documents would include your letter requesting de-registration to CIPC as well as the CIPC confirmation of de-registration. Please ensure you use the case number that SARS allocated to you when you set-up your appointment.
We can help you file your dormant company's income tax returns with SARS, please see our Pricing page for the cost involved, if you need any help with the return, please contact our Help desk.
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