BENEFICIAL OWNERSHIP | ENHANCEMENTS TO TRUST INFORMATION

TRANSPARENCY MATTERS

12 December 2024 marks a significant shift in the requirements for reporting beneficial ownership (BO) for trusts in South Africa. Under the Trust Property Control Act (57 of 1988), beneficiaries who can be identified by name must be reported as beneficial owners, particularly when trust benefits are vested or distributed. This measure aligns with the country's commitment to the Financial Action Task Force (FATF) standards to combat financial crimes and ensure transparency.

Those beneficiaries who can be identified by name will have to report in terms of the BO reporting requirements. The moment a Trust benefit is vested (distributed) in a particular beneficiary (they are identified by name), their details must be reported for BO purposes.

SARS aims to record all beneficial owners of registered Trusts to ensure compliance with the Financial Action Task Force (FATF) requirements. To achieve this, certain information must be submitted via eFiling on the ITR12T return. The required supporting documents may include, but are not limited to:

• 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);
• Compile an Excel Spreadsheet with the beneficiaries’ details (as per BO requirements) and then submit/upload the Spreadsheet as a separate document; or
• Such other document, which will elaborate on Beneficial Ownership in relation to the Trust.

With regard 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).

For the remainder, a schedule should be attached that provides detail (as required) of the remainder of the beneficial owners.

NOTE: This schedule is mandatory even if the beneficial owners are less than 20 and where the beneficial owner is a legal entity or other legal arrangement, the schedule should provide sufficient detail to identify the natural person behind the entity.

Follow the link to read the updated external guide: IT-AE-36-G02 | Comprehensive Guide to the Income Tax return for Trusts | External Guide

KEY UPDATES FOR BENEFICIAL OWNERSHIP REPORTING

• Mandatory Reporting for Identified Beneficiaries: Trusts must report details of any beneficiaries named in vested distributions for BO purposes.
• Supporting Documentation for BO Information: Submit the following documents via eFiling on the ITR12T return:
  • An organogram or schematic diagram showing effective control and relationships with other entities.
  • An Excel spreadsheet detailing the beneficiaries’ BO information.
  • Additional documents, as needed, to provide clarity on BO in relation to the trust.
• Schedule for Multiple Beneficiaries: Trusts with more than 20 beneficiaries must upload an external schedule to ensure all beneficial owners are recorded.

WHY ARE THESE CHANGES IMPORTANT?

The aim is to create a transparent environment that deters illicit financial activities. Trusts now play a pivotal role in the broader regulatory compliance landscape, enhancing South Africa’s standing in global financial governance.

STEPS TO ENSURE COMPLIANCE

1. Update Trust Records: Verify the details of beneficiaries, trustees, and controlling entities before completing the ITR12T form.
2. Prepare and Upload Required Documents: Include all mandatory documentation such as organograms, spreadsheets, and detailed schedules.
3. Use eFiling for Submission: Ensure the ITR12T form is correctly completed with updated BO information for the current year.

CONSEQUENCES OF NON-COMPLIANCE

Failure to comply with BO reporting requirements could result in penalties and reputational damage. Trustees are urged to consult professionals to navigate these updates effectively.

DISCLAIMER

Nothing in this article and/or post should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure accuracy, Tax A Sured (Pty) Ltd does not accept any responsibility for consequences of decisions taken based on this article and/or post. It remains your own responsibility to consult the relevant primary resources when taking a decision.