Notes for completing the Income Tax Self Assessment Return [ITF 12C]
These explanatory notes are meant to give guidance to clients on the completion of the Self-Assessment Return (ITF 12C).
1. Completion and submission of return
The return should be completed in full and submitted online through e-services. These should be submitted by the 30th April of each year. The return is for use by both companies and individuals. The Self-Assessment Return is subject to audit.
Financial statements or any supporting documents should be attached to the Self Assessment Return.
Item 2 - Turnover (export) exchange rates
All export earnings are converted to United States dollars using the average annual cross rate for that particular year.
Item 3 - Other Income may include:-
a. Bad debts recovered
b. Interest received
c. Company dividends
d. Profit on sale of assets
e. Suspense sales allowance granted in the previous year
f. Recoupment of capital allowances previously granted.
Item 13 - Opening value of assets
Refers to the value of assets (at cost) brought forward from the previous financial period, being the closing value of assets for the previous financial period.
Item 14 - Closing value of assets
Refers to the value of assets (at cost) at the close of the current financial period.
Item 17 – Non-deductible expenditure or prohibited deductions
No deduction is allowable in respect of prohibited expenses such as:-
a. Cost incurred in the maintenance of the taxpayer or his family
b. Domestic expenses including travel between home and business place
c. Any loss or expense which is irrecoverable under any contract of insurance
d. Tax levied on income and/or interest charged on overdue tax
e. Restraint of trade
f. Unproductive interest
g. Bond raising and cancellation fees
h. Entertainment expenditure
i. Fines and penalties
j. Provision for doubtful debts
k. Depreciation as charged in the accounts
Item 19.1 - Capital allowances
Taxpayers are entitled to claim special initial allowance on the construction/addition or alteration of specified immovable assets as well as on the acquisition of movable assets that they own. Where no election is made to claim SIA, taxpayers can claim wear and tear on immovable and movable assets at prescribed rates.
Scrapping allowance may also be claimed as capital allowance where the asset qualifies as scrap.
Item 19.2 – Non-taxable income includes:-
a. Company dividends
b. Interest paid on a deposit with a financial institution except interest payable by a financial institution to another financial institution.
c. Proceeds on the sale of assets
Item 23 -Statutory tax rates
The rates of tax chargeable on taxable income depends on the nature of the income.
Item 24.2 – Double Taxation Relief
Companies that suffer double taxation may claim double taxation relief under this item.
Item 28.1 - Withholding tax on amounts payable under a contract for the supply of goods in terms of Section 80 of the Income Tax Act
Taxpayers who fail to produce evidence that they have furnished an Income Tax Return and do not possess a tax clearance certificate, will have 10% Withholding Tax deducted from the invoice value. The payee will credit the Withholding Tax so deducted on the Self Assessment Return. The taxpayer for audit purposes should retain the tax clearance certificates.
Item 28.2 - Withholding Tax on Director Fees
The claim is only applicable to directors whose fees would have been subjected to a deduction of Withholding Tax.
Item 31 - Shortfall/Overpayment
Proof of payment made against the shortfall should be attached to the Self Assessment Return. Where there is an overpayment, the amount will be refunded to client after setting off against any other debts that may be due to ZIMRA.