ALL YOU NEED TO KNOW ABOUT ANNUAL RETURNS!

  1. What is an Annual Return?
  • Each Company or Close Corporation are required by law to file their Annual Return in the prescribed form with the prescribed fee, and within the prescribed period after the end of the anniversary of the date on which the Company or Close Corporation was registered.
  • The purpose for the filing of such Annual Return is to confirm whether the entity is still in business / trading or if it will be trading in the near future.
  • Therefore, if Annual Returns are not filed within the prescribed time period, the assumption is, that the entity is inactive and as such, CIPC will start the deregistration process to remove the Company or Close Corporation from it’s active records. The legal effect of the deregistration of the entity, means it will cease to exist.

  1. If a Company or Close Corporation has filed it’s Tax Return with SARS, is it still required to file their Annual Return with CIPC?
  • A clear distinction must be made between an Annual Return and a Tax Return. An Annual Return is a sort of “renewal” and has the purpose to confirm whether CIPC is in possession of the most up to date information of an entity and that the entity is still conducting business.
  • A Tax Return focuses on taxable income of a Company or Close Corporation, in order to determine the tax liability of the entity to the state and is filed at SARS.
  • Compliance with the one, does not mean that there is automatic compliance with the other. It is two different processes administered in terms of different legislation by two different Government Departments. Therefore, even if the Tax Return has been filed with SARS, the Annual Return must still be filed with CIPC.

  1. What fee should be paid when filing an Annual Return?
  • The Annual Return fee is determined by the turnover of the entity during that financial year.
  • The turnover of an entity, is the amount of money taken by the Company or Close Corporation during it’s financial year. Roughly stated, the turnover of the entity is it’s revenue or income for the financial year.
  • Different fee structures are used for different Company’s and Close Corporations.
  • CIPC can and will not exempt any entity from filing / complying with the Annual Return requirements.
  • Although a Company or Close Corporation was inactive or dormant during the financial year, it is still legally obliged to file and pay the Annual Return.

  1. What is meant by the mandating submission of Annual Financial Statements (AFS) and / or Financial Accountability Supplements (FAS) when filing Annual Returns from 1 July 2018?
  • CIPC has reported in a recent media release that in terms of Section 33 of the Companies Act 71 of 2008 (The Act), Companies and Close Corporation must submit AFS or FAS, together with their Annual Return as from 1 July 2018.
  • Annual Financial Statements (AFS) must be audited, in case of a Public Company.
  • In case of any other Profit Company, Non-profit Company or Close Corporation, it must be audited if so required by the regulation made in terms of subsection (7), taking into account whether it is desirable in the public interest, having regard to the economic or social significance of the company, as indicated by any relevant factors, including:
    • It’s Annual Turnover
    • The size of it’s workforce or
    • The nature and extent of it’s activities
  • The entity can be either be audited voluntarily if the company’s MOI, or shareholders resolution, so required or if the Company’s board has so determined or the company can be independently reviewed that satisfies the regulations made in terms of subsection (7).
  • An entity’s Annual Financial Statements should be submitted if the public interest score (PI) is above 350.

  1. How do I calculate my entities Public Interest Score (PI Score)?
  • A PI score may be used to determine whether a company needs an audit or independently review, and which financial reporting standards apply.
  • A number of points equal to the average number of employees of the entity during the financial year
  • One point for every R1 million (or portion thereof) in third party liability of the company at the financial year end
  • One point for every R1 million (or portion thereof) in turnover during the financial year
  • One point, for every individual who, at the end of the financial year, is known by the company in case of a Profit company, to directly or indirectly have a beneficial interest in any of the company’s issued securities OR in the case of a Non-profit company, to be a member of the company, or a member of an association that is a member of a company.
  • If your PI score is below 350 points, a Financial Accountability Supplement, must be filed.

Please feel free to contact CMV Accountants Incorporated at 012 991 4400 or info@cmv.co.za, should need additional information on AFS of FAS.

The contents of this newsletter were sourced from the CIPC website as well as the Companies Act 71 of 2008, regulations 28, 29, 30 and 33 of the Companies Regulations of 2011.
CMV Group of Companies

Tel : 012 991 4400
Fax : 012 991 3001
Physical: 17 Midas Avenue, Olympus, Pretoria, 0081
E-mail: info@cmv.co.za

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