Additional Requirements Needed to Submit a Trust Income Tax Return to SARS

by | Oct 3, 2023 | Tips from Northbound | 0 comments

Additional requirements are needed in order to submit a trust income tax return to the South African Revenue Service

Since August 2023, the South African Revenue Service (hereby referred to as “SARS”), have introduced additional requirements for us to submit a trust income tax return to SARS when we submit via SARS e-filing. The new changes brought about by SARS affect all trusts regardless of income or asset balances. We now have to upload certain documents to SARS before we can submit the income tax return to SARS.

When we want to submit a trust income tax return and click on the ‘submit return to SARS’ button, the following blocks open up:

  1. Annual Financial Statements/Annual Administration Accounts (Required)
  2. Minutes and Resolutions of the Trustees (Required)
  3. Copy of Trust Instrument i.e. Deed OR Will (Required)
  4. Beneficial Ownership Document Per Entity listed (Required)
  5. Letter of Authority (Required)

The trust income tax return will therefore not be submitted to SARS until we provide SARS with the above-mentioned documentation. Once all the documentation has been provided to SARS, as per the above list, then only the income tax return will be queued for submission to SARS.

Details regarding the required list

I would like to provide a bit more detail regarding the now compulsory documents we must submit.

Annual Financial Statements

In order to submit the trust, and the income tax return to SARS, we must have the signed annual financial statements for the trust on hand. If we do not have the signed annual financial statements, we cannot submit the return to SARS. It is therefore crucial that you sign the annual financial statements as soon as possible and return them to us for our records and for onward submission to SARS.

Minutes and Resolutions of the Trustees

SARS requires the minutes of meetings to approve the annual financial statements. The resolutions of the trustees are also required.

 Concerns have been raised that it is not necessary to submit all resolutions and minutes since this will be time-consuming and may not necessarily be relevant to SARS. SARS want to see all meeting minutes that provide a formal record documenting the decisions and decision-making process made by the board of trustees. This means that SARS wants copies of all minutes of meetings, excluding those dealing with internal trustee governance arrangements and/or administrative matters, must be submitted to SARS. So SARS wants the minutes of meetings where the beneficiary split was agreed upon by all trustees etc.

Copy of Trust Instrument i.e. Deed or Will

If we registered your trust with the Master, we should have a copy of the trust deed on hand. Please note that SARS has a file size restriction, where documents cannot be bigger than a certain size. We are therefore unable to send the trust deed as is. It first needs to be compressed on our side, by us, so that SARS will allow us to upload the trust deed onto the SARS e-filing website.

If we did not register your trust with the Master, please make sure you have sent us a copy of the trust deed.

Beneficial Ownership Document Per Entity listed

 The Inter-Departmental Committee Beneficial Ownership and Transparency (IDC-BOT) program aims to identify beneficial owners of Trusts who may gain financially from the proceeds of the Trust. SARS’ aim is to record all beneficial owners of registered Trusts in order to comply with the Financial Action Task Force (FATF) requirements. In this regard, certain information must be submitted via e-filing. A beneficial ownership document is one of the documents that must be submitted to SARS.

For purposes of this notice, these documents may include, but are not necessarily limited to, the following:

  • An organogram, illustrative, or schematic diagram depicting effective control and how the affairs of the Trust relate to other entities (interest in other entities, i.e., ownership structure in the event of entity-layering);
  • Excel spreadsheet containing the above information; or
  • Such other documents will elaborate on Beneficial Ownership in relation to the Trust.

With regards to the capture of beneficial ownership information, it is mandatory for the current year’s return that at least one document be submitted that relates to beneficial ownership information. In the event there are more than 20 beneficiary owners, the taxpayer must upload a supporting document that reflects the additional beneficiary owner(s).

Our Secretarial Department has been requesting information from you with regard to beneficial ownership. It is imperative that you provide us with this crucial information as soon as possible as we cannot submit the trust income tax returns to SARS without it.

We also have to list the beneficial owner’s details in the trust income tax return. The following information is required by SARS which we populate manually in the income tax return:

  • Trust type (Inter vivos Trust, Testamentary Trust, Foreign trust [non-residential trust], Special Trust Type A inter vivos, Special Type Trust A Testamentary, Special Trust Type B Testamentary)
  • Specify the number of beneficial owner
  • Entity type (individual, company, trust, other)
  • Beneficial owner category (Founder, Trustees, Beneficiaries, Donor, Protector)
  • Initial
  • Surname
  • Date of birth
  • ID number
  • Income tax reference number
  • Place of birth
  • Email address
  • Cell phone number
  • Physical address
  • Jurisdiction

It has also been submitted that instances may arise where the same person could be the founder, trustee, and/or beneficiary. The question has been asked whether such a person’s details must be captured as such for each capacity. In this regard, SARS wishes to advise that this process will only be required in the first year of submission (2023). The information will be prepopulated in future returns with an edit function to allow for amendments to the beneficial ownership information.

 Letter of Authority

If we registered your trust with the Master, we should have this document on hand. If we did not register your trust, please ensure that this document was sent to us.

 As you can see from the above, submitting your trust income tax return is no longer a simple matter. We need to have the correct documentation/information on hand for us to submit your trust income tax return to SARS timeously to avoid any possible interest and penalties. This can only be achieved if we work together.

By Laverne Geswint – GTP (SA)
General Tax Practitioner