Trustees should take note of additional requirements relating to the filing of provisional Trust tax returns in January 2024 as SARS climbs on the beneficial ownership reporting train.

Filing tax returns for a trust is no longer as straightforward as it used to be. Earlier this year, the South African Revenue Services (“SARS”) issued a notice that new requirements have been introduced when filing tax returns for a trust. SARS now requires that the beneficial ownership information of a trust must accompany the prescribed documentation when filing the tax returns for the specific trust. SARS indicated that it is a mandatory requirement that each trust files a Beneficial Ownership Declaration when filing its tax returns, failing which the returns cannot be filed.

This requirement stems from the promulgation of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022 (“Amendment Act”) which came into full effect on 1 April 2023 and affects all companies and trusts. The Amendment Act requires that the warm bodies behind the trust be disclosed to establish who is the beneficial owner of a specific trust and to keep a record of these beneficial owners. These warm bodies stated above refer, in most cases, to the founder, trustees and beneficiaries of the trust. 

In order to establish who the beneficial owners of the trust are, it is important that one must understand what the new beneficial ownership regulation is and what it is trying to achieve. The main objective for South Africa is to be removed from being internationally grey-listed by implementing controls to more tightly regulate corruption, money laundering, terrorist financing and other related crimes. The legislation aims to provide transparency and evidence able to convince the International Financial Action Task Force (“FATF”) that South Africa is no longer a high-risk territory which needs to be grey-listed.

A beneficial owner in the context of a trust can be -

1. a natural person who indirectly or directly effectively owns the trust property; or
2. every founder of the trust; or
3. every trustee of the trust; or
4. every beneficiary of the trust; or
5. a natural person who exercises effective control of the trust’s administration. 

One must note that the tax returns cannot be filed without the Beneficial Ownership Declaration for the trust. Not only is it required to be submitted, but SARS will cross-check the information of the Beneficial Ownership Declaration with the Master of the High Court’s portal where trustees are required to file the same information for their trust with the Master. 

SARS has access to other electronic platforms also which enable it to cross-check whether the information submitted to the Master correlates with that submitted to SARS. If the information is mismatched, possible sanctions and penalties may come into play. For non-compliance or failure to submit accurate and correct information to the Master, trustees may be liable to a fine not exceeding R10 million and/or imprisonment of up to 5 years.

Until South Africa finds itself under less scrutiny for money laundering and related activities, beneficial ownership reporting and the strict compliance that comes with it will continue and form part of every trust’s landscape. Trustees must take note and ensure their compliance with the requirements stipulated in the Amendment Act and also ensure that the correct information and documentation is submitted to SARS with the filing of provisional tax returns for their trust. 


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