If you need to take responsibility for a return by signing it, you should have a good understanding of what you are signing:

Although we look at the details throughout this course, you might not want to become an expert, or have time to look at all the details, but you have to sign the tax return.

If so, where do you start, and what do you look for in order to ensure reasonability?

Note: My assumption is that you understand the business of insurance, even if you do not understand the intricacies of the tax computation.

I always like to have a quick discussion with the actuaries. They normally have a sense of how much tax much be paid. They would not have gone through all the details of what the Tax Act stipulates, but they have a good idea of how much money the company made.

Once you've had a discussion with the actuary, it is always a good idea to have a meeting or discussion with the preparer of the calculation:

At the meeting/discussion have at least the following available:

1. Tax calculation on Forms 1 to 7
2. Copy of the audited financial statements
3. Management accounts for the year
4. IT14L (pdf) document
5. Prior year tax calculation (Forms 1 to 7)
6. IT34 tax assessment for most recent year assessed.
7. NITS Schedule (A very useful tax history summary.)

The starting point:

Form 1 (New forms adjusted for IFRS17)

IFRS 17 is applicable w.e.f. 1 January 2023 and applies in respect of years of assessment commencing on or after that date.

If you search on the SARS website namely www.sars.gov.za under "29A", it will take you to a link named Long-term Insurance. Click on that link and it will take you to where you can download the Spreadsheet (Forms 1-7) and the IT14L.

Note: If you complete the tax returns for years of assessment before IFRS 17 was applicable, please use the old version of Forms 1 to 7.

Very simplistically:

1. Make sure the Income Statement agrees or can be reconciled to Form 1, Column 1.
2. With regards to IFRS17, there is a specific "IFRS17 Adjustments" column 2, on Form 1. Make sure you understand how those were treated.
   
3. If there are amounts in Column 3, make sure you understand what those adjustments relate to.
4. Make sure the Adjusted Total in Column 4 adds up to the total in column 10, which is Columns 5 to 9 added together.
5. Make sure that the asset reconciliation on Form 1a is performed, and the net total is zero. (On the old forms, the asset reconciliation is on Form 1.)
6. Ensure that opening balances on Form 1, top few lines, agree to the closing balances of the previous year.
7. Ensure that the liability movement through the Income Statement agrees with the difference between the total opening and closing liabilities. (This becomes complex in IFRS 17. In IFRS 4, there was typically a line called "Transfer to/from Life Fund" in the Income Statement. With IFRS 17 there is a distinct difference between the Income Statement and Balance Sheet (cash flow) movements. (The liability note in the financial statements is a very useful guide in that regard.)
8. Form 1 is, in my view, the most important form of the tax calculation, and once you get form 1 to "balance", and reconcile, the rest of the calculation flows easily.
9. If you are unsure what is meant in the points above, ask the preparer to show you and confirm that it is in order. If not, the starting point might be a problem.
   And if the starting point is problematic, the rest of the calculation will not "flow" properly.

Once you are comfortable with the above, you can ask the following questions, or confirm the following with the preparer:

1. How many funds do we have?
   
   
2. Did we make "underwriting profits" or "losses" in the Policyholder Funds, and the Risk Fund, and are those reasonable? (Normally the actuaries would have immediate answers in that regard.)
   The "underwriting profits" or "losses" above reflects in the line named "Deduct/add: Transfer (to) from CF" of Form 1 and are essentially the differences between the Market Value of Assets (MVA), and the Value of Liabilities (VOL).
   If MVA exceeds VOL, there was an "underwriting profit".
   If VOL Exceeds MVA, there was an "underwriting loss"
   
   
3. How do we do allocations for:
   1) Premiums
   2) Investment returns
   3) Realised and Unrealised Gains and Losses
   4) Claims
   5) Expenses
   6) Any other allocations on Form 1
   
   
4. Do we use BGR 30, or do we have a different/more appropriate basis of allocating expenses?
   
5. Has exempt or non-taxable income such as dividends been deducted from income?
   
6. Have you made adjustments for provisions and non-deductible expenses? (This should be on Form 4.)
   
7. Do we have any transfer credits brought forward from prior years? (This should be on Form 6.)
   
8. How do we account for/determine Capital Gains Tax (CGT)?
   
9. Can you reconcile the profit on Form 1 and the Income Statement with the Taxable Income on Form 7?
   
10. Have we been assessed for the prior years, and does the IT34 agree with last year's tax submission?

If you have clarity on the above and the preparer was able to adequately respond to all the questions, it is likely, although not certain, that the tax calculation is reasonable.

Then make sure that the IT14L (pdf) document is appropriately completed.

I list all the documents to be submitted with the tax return below.

The above also applies to a shareholder, director or other individual who takes responsibility and wants some comfort that the tax number is in order.

(Obviously the above is very simplistic, and not complete, but I thought it would be beneficial for someone who needs to take responsibility, and need some pointers to get comfort.)