Important notice for trustees: Enhanced requirements for filing tax returns with SARS

It is important for all trustees to take 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 passive, is registered for income tax purposes. The annual returns will not be as burdensome for a passive Trust as opposed to an active Trust.

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 Income Tax Return Wizard system to enable SARS to intensely verify the information submitted during tax return season.

Beneficial Ownership Declaration
With the updated Income Tax Return Wizard system, SARS implemented a Beneficial Ownership Declaration that requires that the beneficial ownership information of all trustees, named beneficiaries and anyone who may gain financially from the Trust must be reported. This is information which can and will be verified by SARS.

Verifying Beneficial Ownership
The question that may arise is how would 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, of paramount importance that the beneficial ownership information submitted to the Master matches the information disclosed to SARS.

Supporting documents
The Income Tax Return Wizard 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 its returns within the specified timeframe stipulated. This means that all trustees of the Trust must comply with the notice and it would not suffice to merely rely on the accountant or auditor to ensure that the Trust is compliant in all aspects.

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

Seeking assistance
The clock for tax returns for Trusts has started and 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 of how to address these new requirements of the Amendment Act, feel free to contact any of our commercial or fiduciary advisors below to discuss how we can assist you comply with these new requirements. Keep an eye out for our next article on further developments brought about by the Amendment Act.

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 has 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).

July 3, 2023
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