By Robyn Joubert
With the 2025 tax year ending on 28 February, young and upcoming farmers have very little time to get their business tax affairs in order – or risk falling on the wrong side of the South African Revenue Services (SARS).
While some young agripreneurs may knowingly take a chance with tax evasion, poor tax compliance is more often a case of them prioritising business growth over tax returns.
“Unfortunately, there are severe, business-ending consequences for tax evasion or non-compliance for young entrepreneurs in South Africa today. Besides issuing a punitive fine for non- or poor compliance, SARS can levy additional charges for submissions and payments. In extreme cases, SARS can shut down your business due to gross non-compliance,” said Stefan Kritzinger, head of compliance and support at Govchain, an online tax compliance and company registration service provider.
Agribusinesses never want to pay more tax than necessary – and should take proactive steps to improve their tax submissions and take full advantage of any available benefits.
Common mistakes
“Farmers often make common errors when submitting their tax returns. One of the most common is inaccurate record-keeping,” said Stefan.
“It is critical to maintain detailed and up-to-date records of income and expenses specific to farming activities. Without these records, farmers may underreport or overreport their income, potentially resulting in overpayment of taxes or, conversely, triggering compliance audits.”
Another common problem is a failure to claim deductions available to farmers.
“Farming operations often incur significant input costs, including expenditures on feed, seeds, fertilizers and equipment repairs. Overlooking these deductions not only increases tax liability but also reduces the financial support available to sustain farming operations.”
Incorrect valuation of livestock and produce is another area where mistakes occur.
“Improper valuations – whether of opening stock, closing stock or sales – can distort taxable income calculations. Similarly, unreported costs for casual or seasonal labour often lead to non-compliance with payroll requirements. Failing to declare wages or adhere to payroll compliance standards can have legal and financial repercussions for farming enterprises.”
VAT compliance is a common challenge for farmers who are VAT vendors.
“Forgetting to claim input VAT on farming expenses or neglecting to pay output VAT on sales can disrupt cash flow and create unnecessary financial stress. Proper management of VAT claims and the filing of these returns every second month (depending on a farmer’s income and nature of business) is essential to maintain liquidity and avoid penalties,” said Stefan.
Lastly, miscalculations of capital gains when selling farming assets, such as land or machinery, can result in significant compliance issues.
“By complying with the law, businesses are able to build and retain credibility. Tax compliance opens up opportunities to apply for contracts with big companies or the government, which require a tax clearance certificate for trading. Most importantly, tax compliance helps a youth-led business avoid unnecessary costs, ultimately protecting the integrity of its cash flow,” said Stefan.
A good place to start
Young agripreneurs should take advantage of a range of resources to navigate the tax and compliance requirements specific to farming.
These resources provide valuable guidance and ensure farmers remain informed about the latest regulations and best practices.
- The SARS eFiling portal is a good starting place for information. Tax returns can be filed from the convenience of your farm on the eFiling portal or the SARS MobiApp. You can also make an appointment with SARS online.
- Consider using a professional service provider such as Govchain to reduce the administrative tax burden. Govchain provides tools to manage various aspects of farming business operations (including bookkeeping, tax filing and compliance management) and allows business owners to send invoices, receive payments, and file taxes through a single platform. Govchain assists with VAT registration, tax clearance certificates, import/export licenses, and trademark registration.
- Agricultural unions such as AgriSA and the National African Farmers’ Union (NAFU) often offer sector-specific tax and compliance resources to members.
- Consult a tax firm with expertise in the complex tax structures unique to farming.
- Stay informed on evolving policies by attending workshops and webinars hosted by SARS or agricultural bodies.
- The SARS Guide on the Taxation of Farming Operations provides clarity on critical areas impacting farming businesses.
Gain clarity with farm tax guide
The SARS Guide on the Taxation of Farming Operations is an essential resource for farmers, providing clarity on critical areas that impact farming businesses in South Africa.
“By following the guidelines outlined in the SARS guide, farmers can better manage their tax obligations while optimising deductions and remaining compliant with South Africa’s tax regulation,” said Stefan Kritzinger, head of compliance and support at Govchain, an online tax compliance and company registration service provider.
One significant focus of the guide is the availability of special farming deductions under Section 26(1) of the Income Tax Act.
“These provisions allow farmers to claim deductions for expenses such as soil preparation, irrigation systems and plantations, reducing their taxable income and supporting investment in essential agricultural infrastructure,” said Stefan.
“Farmers can also deduct costs associated with capital development projects, such as building dams, digging irrigation ditches, and erecting fencing, recognizing the long-term nature of these investments in enhancing farming operations,” he said.
The guide emphasises the correct valuation of livestock. Livestock must be valued based on cost, with SARS providing standard values for specific categories. Farmers must ensure they apply these valuations consistently to avoid discrepancies.
The SARS guide highlights the various forms of income considered as proceeds from farming activities. This includes not only the sale of crops, livestock and produce, but also subsidies, grants and insurance payouts related to farming activities, ensuring comprehensive reporting of income.
“Finally, the guide addresses the obligations of provisional taxpayers in the farming sector. Many farmers fall into this category and are required to estimate and pay their taxes twice a year. An additional voluntary top-up payment can be made to avoid penalties,” Stefan said.
Download the guide here.
 | Stefan Kritzinger, Govchain head of compliance and support, says common errors on tax returns can lead to farmers missing out on tax refunds and incurring costs. |
