Corporate income tax (CIT) is the tax SARS levies on a company's taxable income for a year of assessment. A company calculates and declares it annually on the ITR14 return, having already paid most of it in advance through provisional tax instalments during the year.
What it means
CIT is charged on taxable income, which starts from accounting profit but is adjusted for items the tax law treats differently - certain deductions are disallowed, others are accelerated. The final liability on assessment is settled against, or refunded from, the provisional payments already made.
Where it fits in
CIT taxes the company's profit after every expense, including the full payroll bill, has already been deducted. So the wage and salary cost a business incurs reduces its taxable income and, in turn, its CIT liability, before CIT is even calculated.
Key rules
- CIT = corporate income tax, charged on a company's taxable income.
- Declared annually on the ITR14, settled against provisional payments made.
- Taxable income adjusts accounting profit for tax-specific rules.
- Payroll cost, already deducted in arriving at profit, reduces taxable income.
