Trusts, anti-money laundering, and tax season. Stay ahead with new filing requirements!

With tax return season upon us, trustees should note additional requirements for filing tax returns with the South African Revenue Services (“SARS”).

With the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022 (“Amendment Act”) having come into full effect on 1 April 2023, SARS has updated its online income tax return system to enable SARS to intensify the verification of information submitted during tax return season.

Trustees should note that a trust is regarded as a person in terms of the Income Tax Act and that it is the trustee’s responsibility to ensure that the trust, whether active or dormant, is registered for income tax purposes.

With the updates to the income tax return system, SARS implemented a Beneficial Ownership Declaration that now requires that the beneficial ownership information of all trustees, named beneficiaries and anyone who may gain financially from the Trust be reported. This information will be verified by SARS.

The question that may arise is how will SARS be able to verify this information. The answer is simple, SARS is one of the authorized entities and has access to the Master’s portal which enables SARS to verify the beneficial ownership information of all relevant trustees and named beneficiaries. It is, therefore, vitally important that the beneficial ownership information submitted to the Master matches the information disclosed to SARS.

The income tax return system now requires that supporting documentation for the trust tax returns must be uploaded. This information includes the trust deed, letters of authority, the minutes of the meetings and the resolutions reached by the trustees as well as the annual financial statements of the trust.

SARS will provide an annual notice to all trusts to lodge and submit their returns within the specified timeframe stipulated. This means that all trustees of the Trust must comply with the notice and it may not suffice to merely rely on the accountant or auditor to ensure that the Trust is compliant in all respects.

SARS places the responsibility squarely on all trustees to ensure that the trust’s returns have been submitted and that the beneficial ownership information has been correctly uploaded and disclosed, whether or not, an accountant or auditor was involved.

With the clock on tax returns for trusts running it is vital that all relevant parties to whom the Amendment Act applies ensure that the Trusts are compliant with the SARS and the Master. If you feel uncertain about how to address these new requirements of the Amendment Act, contact a fiduciary specialist or your accountant to ensure you comply with these new SARS filing requirements.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).

September 8, 2023
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