Accounting, Taxation, Business Advisory

OCTOBER 2026 NEWSLETTER

A focused update from SPJ Accountants on dividends tax compliance, director details amendments, and PI score-based financial reporting obligations.

A Word from Our CEO
At SPJ Accountants, we continue to emphasise that strong businesses are not built on income alone—they are built on structure, compliance, and attention to detail. In this edition, we reflect on three important areas that often determine whether a business remains compliant, efficient, and well-governed: dividends tax compliance, director details amendments, and PI score-driven financial reporting obligations.

Compliance does not end at profit
Many businesses focus on generating profits, but overlook the compliance responsibilities that come with those profits. Dividends tax is a clear example of this.
When profits are distributed to Shareholders, compliance with the requirements of the South African Revenue Service (SARS) becomes essential. Failure to properly account for dividends tax can lead to penalties and unnecessary financial strain. True financial success is therefore not just about earning profits, but about managing them responsibly.

Governance lives in the details
Corporate governance is not only about major decisions—it is also about maintaining accurate and up-to-date company information. Director details amendments, such as changes in contact information or addresses, may seem minor, but they are critical for ensuring that a company remains reachable, compliant, and properly recorded.
The Companies and Intellectual Property Commission (CIPC) requires that companies maintain accurate records at all times. When these details are neglected, businesses risk missed communication, administrative delays, and compliance issues that could have been easily avoided.

Structure determines reporting obligations
The PI score framework reminds us that not all companies are treated the same when it comes to financial reporting. The level of public interest in a company determines whether financial statements must be independently reviewed, audited, or simply compiled.
This structure is not designed to create complexity, but rather to ensure that financial reporting matches the size, impact, and risk profile of the business. Understanding your PI score helps you plan ahead, manage compliance costs, and avoid unnecessary reporting burdens.

Final Thought
Across dividends tax, director information management, and financial reporting requirements, one principle remains consistent: compliance is built on discipline and attention to detail.
Businesses that take compliance seriously are better positioned for growth, investment, and long-term sustainability. Those that neglect it often face avoidable risks and disruptions.
At SPJ Accountants, our role is to ensure that businesses not only understand these requirements but are fully supported in meeting them with accuracy and confidence.

Till next time,
Spokazi P Jojo
Founder & CEO

ACCOUNTING

PI Score for Financials: who prepares which type of Annual Financial Statements (AFS)

In South Africa, not all companies are required to prepare the same level of Annual Financial Statements (AFS). The type of AFS a business must prepare depends largely on its Public Interest (PI) Score, as well as its company category and regulatory requirements.
Understanding the PI Score system is essential for ensuring compliance, avoiding unnecessary audit costs, and producing the correct level of financial reporting.

What is a PI Score?

A Public Interest (PI) Score is a measurement used to determine the level of public interest in a company. It is calculated annually based on several factors, including:

• Number of employees

• Turnover

• Number of shareholders

• Amount of third-party liabilities

• Nature and scale of business operations
  The higher the PI Score, the greater the level of public interest in the company—and therefore the stricter the reporting requirements.

Why the PI Score matters

The PI Score determines:

• Whether financial statements must be independently reviewed or audited

• The level of accounting standards required

• The complexity and format of AFS preparation

• Compliance obligations under company law

  It is therefore a key factor in corporate reporting obligations.

Who prepares which type of AFS?

1. High PI Score companies (higher compliance level)
Companies with a higher PI Score generally face stricter reporting requirements.
These companies typically require:

• Independent audits of financial statements

• Full compliance with recognised accounting standards

• Detailed disclosures in financial statements

These are usually larger companies or those with significant public interest, such as:

• Companies with many employees

• Businesses with high turnover

• Companies with multiple shareholders or external investors

2. Medium PI Score companies
Companies with a moderate PI Score may require:

• Independent review engagements instead of full audits (depending on circumstances)

• Standard Annual Financial Statements prepared in line with accounting frameworks

• Less extensive disclosures compared to high PI companies

These are typically medium-sized private companies.

3. Low PI Score companies (smaller entities)
Smaller companies with a low PI Score generally have simplified reporting requirements.
They usually:

• Do not require an audit or may be exempt

• May require independent review only if certain conditions apply

• Can prepare simplified Annual Financial Statements

• Follow reduced disclosure requirements

These are typically small private companies with limited operations and fewer stakeholders.

4. Owner-Managed or Close Corporations (lower compliance burden)
Smaller, owner-managed businesses often fall into this category and may:

• Prepare internally generated AFS

• Rely on Accountants for compilation rather than audit

• Have simplified compliance obligations

However, they are still required to maintain accurate records and comply with tax and reporting requirements.

Role of Accountants in AFS preparation

Professional Accountants play a key role in ensuring that AFS are:

• Accurate and compliant

• Prepared according to the correct accounting framework

• Supported by proper bookkeeping records

• Aligned with tax requirements

• Ready for audit or review where required

Without proper bookkeeping and management accounts, preparing compliant AFS becomes difficult and risky.

Common mistakes businesses make

Many businesses misunderstand PI Score implications and end up:

• Overpaying for unnecessary audits

• Underestimating compliance requirements

• Using incorrect accounting frameworks

• Failing to maintain proper supporting documentation

• Submitting incomplete or inaccurate AFS

These mistakes can lead to compliance issues with the Companies and Intellectual Property Commission (CIPC) and the South African Revenue Service (SARS).

Why this matters for business owners

Understanding PI Score-based reporting helps business owners:

• Plan for compliance costs

• Avoid penalties and regulatory issues

• Ensure accurate financial reporting

• Improve Investor and Stakeholder confidence

• Make informed governance decisions

It also ensures that businesses are not overburdened with unnecessary reporting requirements.

Conclusion

The PI Score is a critical factor in determining the level of financial reporting required for a company. From full audits to simplified financial statements, each business must comply with the correct standard based on its size and level of public interest.
At SPJ Accountants, we assist businesses in calculating their PI Score, determining the correct level of AFS, and ensuring full compliance with accounting and regulatory requirements—helping businesses stay compliant, efficient, and financially confident.

TAXATION

Dividends Tax compliance: what Companies and Shareholders must know

Dividends tax is an important but often misunderstood area of corporate taxation in South Africa. It directly affects how profits are distributed to shareholders and places specific compliance responsibilities on companies and investors.
Proper understanding of dividends tax compliance helps avoid penalties, ensures correct reporting, and maintains good standing with the tax authorities.

What are Dividends?

A dividend is a distribution of profits by a company to its Shareholders. It represents a return on investment and is usually paid from after-tax profits.
Dividends may be paid in cash or other forms of value, depending on the company’s decision and available reserves.

What is Dividends Tax?

Dividends tax is a withholding tax applied to dividends paid by South African companies to Shareholders.
In most cases, the tax is:

• Withheld by the company (or withholding agent)

• Paid to the South African Revenue Service (SARS)

• Deducted before the Shareholder receives the dividend

The current standard rate is generally 20%, unless exemptions or reduced rates apply under specific circumstances.

Who is responsible for Dividends Tax?

Dividends tax compliance involves both the company and the Shareholder:
1. The Company’s Responsibility
The company declaring the dividend must:

• Calculate dividends tax correctly

• Withhold the correct amount from dividend payments

• Submit the tax to SARS within the required timeframe

• Submit accurate dividend tax returns and supporting documentation

Failure to comply can result in penalties and interest.

2. The Shareholder’s role
Shareholders are generally the recipients of dividends, but they may:

• Submit exemption declarations where applicable

• Provide correct tax residency information

• Ensure their details are updated with the company

Certain shareholders (such as qualifying companies or retirement funds) may qualify for exemptions or reduced withholding tax.

When is Dividends Tax payable?

Dividends tax becomes payable when:

• A dividend is declared by a company

• The dividend becomes payable or is distributed to Shareholders

The company is required to pay the tax over to SARS within strict deadlines after the dividend is paid.

Exemptions from Dividends Tax

Some dividends may be exempt from dividends tax, depending on the Shareholder type. Common exemptions include:

• South African resident companies

• Public benefit organisations

• Retirement funds

• Certain government entities

• Shareholders who submit valid exemption declarations

Proper documentation must be in place for exemptions to apply.

Importance of Dividends Tax compliance

1. Avoiding penalties and interest
Non-compliance or late payment of dividends tax can result in financial penalties and interest charges from SARS.
2. Ensuring proper financial reporting
Dividends tax affects both company expenses and Shareholder returns. Accurate accounting ensures financial statements reflect true distributions.
3. Maintaining corporate compliance
Proper dividend tax management is part of overall corporate governance and compliance obligations.
4. Protecting Shareholder relationships
Accurate and transparent dividend payments help maintain trust between companies and shareholders.

Common Dividends Tax mistakes

Many businesses face compliance issues due to:

• Incorrect withholding of tax

• Missing exemption declarations

• Late submission of dividend tax returns

• Poor recordkeeping of shareholder details

• Misclassification of distributions

• Lack of understanding of tax obligations

These errors can lead to audits and penalties.

Recordkeeping requirements

Companies must maintain detailed records of:

• Dividend declarations

• Shareholder registers

• Tax exemption forms

• Payment records

• Dividend tax submissions

• Supporting financial resolutions

Proper documentation is essential for audit readiness and compliance verification.

The role of Professional support

Dividends Tax can become complex, especially for companies with multiple shareholders or varying exemption statuses. Professional accounting support ensures:

• Correct tax calculations

• Proper exemption application

• Timely SARS submissions

• Accurate shareholder reporting

• Reduced compliance risk

Conclusion

Dividends tax compliance is a critical part of corporate financial management. It ensures that profit distributions are handled correctly, taxes are paid timeously, and both companies and Shareholders remain compliant with regulatory requirements.
At SPJ Accountants, we assist businesses with dividends tax calculations, submissions, exemption management, and full compliance support—ensuring that dividend distributions are accurate, transparent, and fully compliant with tax legislation.

BUSINESS ADVISORY

Director details amendments: keeping company records accurate and compliant

In any registered company, Director information is not static. Contact details, addresses, and personal information can change over time. While these may seem like minor updates, they are legally important for maintaining accurate company records and ensuring regulatory compliance.
Keeping director details up to date is a key part of good corporate governance and compliance management.

What are Director details amendments?

Director details amendments refer to any updates or changes made to the personal and contact information of a company Director. These changes do not affect the director’s appointment status but ensure that company records remain accurate and current.
Common amendments include:

• Change of residential address

• Change of postal address

• Updated email address

• Change of contact number

• Correction of identity details

• Updating citizenship or residency information (where applicable).

Why Director details must be updated

Accurate director information is required for legal, administrative, and compliance purposes. Outdated information can create serious operational and regulatory risks.
1. Legal compliance
Companies are required to maintain up-to-date records with the Companies and Intellectual Property Commission (CIPC). Failure to update director details may result in non-compliance issues or delays in official correspondence.
2. Communication and notifications
Regulatory bodies, banks, and other institutions rely on director contact details for official communication. Incorrect information can result in missed notices, deadlines, or legal correspondence.
3. Banking and financial requirements
Financial institutions often require verified and updated director information for:
Account verification
Loan applications
KYC (Know Your Customer) compliance
Business transactions
4. Tax and regulatory matters
The South African Revenue Service (SARS) and other regulatory bodies may need accurate director details for tax-related communication and verification processes.

How Director details are updated

The process of updating director information typically involves:

• Submission of updated information to the relevant regulatory authority

• Completion of official change forms

• Supporting documentation (such as proof of address or identity documents)

• Internal company resolution or approval (if required by company policy)

Once submitted, the changes must be reflected in the company’s official records.

Common mistakes businesses make

Many companies overlook Director detail updates due to:

• Assuming changes are not important

• Delayed submission of updates

• Poor internal recordkeeping

• Lack of awareness of compliance requirements

• Not updating all relevant systems (e.g., bank, SARS, CIPC records)

These mistakes can lead to administrative complications and compliance risks.

Importance of accurate Director records

Maintaining correct director details ensures:

• Smooth communication with authorities

• Compliance with legal requirements

• Reduced risk of administrative penalties

• Accurate company documentation

• Efficient business operations

It also strengthens the overall governance structure of the company.

Role of professional support

Professional accounting and compliance services help businesses by:

• Updating director records correctly and timeously

• Ensuring compliance with regulatory requirements

• Coordinating updates across multiple platforms (CIPC, SARS, banks)

• Maintaining accurate corporate records

• Reducing administrative burden on business owners

Conclusion

Director details amendments may seem minor, but they play a crucial role in maintaining legal compliance and operational efficiency. Accurate and up-to-date records ensure that companies remain reachable, compliant, and well-organised.
At SPJ Accountants, we assist businesses with director detail updates, company secretarial services, and full compliance support—ensuring that all records are accurate, current, and properly maintained across all regulatory platforms.