Trustees play a vital role in managing trusts, and staying compliant with tax and regulatory obligations is paramount. Recent legislative amendments have brought significant changes to the reporting obligations on trustees, with severe penalties for non-compliance (see our previous update on this here).
This article summarises the key new tax and Master's office reporting obligations for trustees, as well as the related deadlines.
Master of the High Court (the "Master")
Governing legislation: The Trust Property Control Act, 1988 and associated regulations ("TPCA").
What must be reported?
Prescribed information concerning beneficial ownership of the trust. Specifically, each beneficial owner under the categories listed in sections 1(a) to 1(e) in the TPCA, referring to:
- Founder
- Trustee
- Named beneficiary
- Other natural person that indirectly or directly owns the trust property, and
- Other natural person who exercises effective control of the administration of the said trust arrangements.
Who must report?
Trustees of trusts regulated by the Master under the TPCA.
How to report?
Submit the relevant prescribed information to the Master by means of populating the electronic register available on the Master's portal. Where the trustees are unable to lodge the beneficial ownership register electronically, they may approach the Master's office.
Reporting deadline/s?
The relevant TPCA amendments became effective 1 April 2023 and are currently in force. Accordingly, trustees must ensure that they submit the beneficial ownership register urgently, if they have not already done so.
Consequences of non-compliance?
Fines of up to R10 million and imprisonment of up to 5 years, or both.
South African Revenue Service – third-party reporting
Governing legislation: Public notice issued in terms of section 26 of the Tax Administration Act, 2011 on 30 June 2023 ("Public Notice").
What must be reported?
Information concerning any amount vested in a beneficiary, including income (nett of expenditure), capital gains and capital amounts.
Who must report?
Trusts, other than Collective Investment Schemes and Employment Share Incentive Scheme Trusts.
How to report?
Submit an IT3(t) form via eFiling or compile data in accordance with SARS' Business Requirements Specification: IT3 Data Submission.
Reporting deadline/s?
The first submission containing information in respect of the period from 1 March 2023 to 29 February 2024 is due on 31 May 2024. This is an annual reporting requirement. Accordingly, submissions containing all prescribed information in respect of the period from 1 March to the end of February of the following year must be made by 31 May of each year.
Consequences of non-compliance?
Administrative non-compliance penalties and imprisonment of up to two years or both.
These new reporting requirements have given rise to various challenges for trustees, both as regards the practical submission of returns or information and understanding what exactly must be reported in their specific circumstances. It is clear that navigating the evolving reporting requirements for trustees has become a complex endeavour. We expect that enforcement will be prioritised as South Africa seeks to be removed from the grey list. It is, therefore, imperative that trustees keep abreast of relevant updates in this space.
Reviewed by Deon Beachen, a Director in ENS' Private Clients Practice
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
