Regulators focus on trust distributions
SARS found a R58bn gap for the 2015 tax year between distributions and income declared by trusts, reports Moneyweb.
It was the first complete year it could match tax returns with financial statements because of non-compliance.
Trusts are regarded as a major conduit for money laundering and terrorism financing as well as for tax evasion.
Amendments to the Trust Property Control Act as well as new SARS reporting requirements have since been introduced to ensure greater transparency and compliance, and also to comply with recommendations from the Financial Action Task Force to get the country off its grey list.
Phia van der Spuy, founder of Trusteeze and presenter of The Tax Faculty’s recent webinar on trusts, said a major change to trust administration is the introduction of the IT 3(t) reporting obligation to SARS.
This move means trustees will now become third-party data providers like financial institutions.
From September this year trustees will have to submit demographic details for trustees and beneficiaries, details of the submitting person or entity, and details of the distributions to beneficiaries and other financial flows such as donations and contributions.
The other major change is the obligation to notify the Master of the High Court of the beneficial ownership of the trust assets and the names of all beneficiaries.
Van der Spuy said it is becoming increasingly important for trustees, who are the joint controllers of trust assets, to ensure that all the trust affairs are in order.
‘The slapdash work that has been done on trusts is something of the past,’ she warned.
The level of non-compliance in terms of the submission of tax returns, registration with SARS and paying tax has seen SARS upping the ante.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.