SARS has completely overhauled tax returns for trusts. Although this has been hinted at for a long time, the degree of overhaul is far from expected.
Sidney Fletcher
TTP(SA), Senior Manager Trust and Deceased Estate Tax Compliance
Micaela Paschini
Tax Attorney
The warning signs started late last year, when SARS published a notice under which trusts will be required to submit third party returns, confirming the amounts vested in beneficiaries during a given tax year. Following this, SARS released a statement this past week indicating that as from 23 June 2023, a range of changes will take effect. SARS states that “these changes will provide taxpayers with the clarity and certainty they require to meet their tax obligations, making it easier for them to comply.”
The 5 Major Changes to Trust Returns:
A word of caution. The changes constitute a complete overhaul of the trust return process and will require trustees to truly apply their minds when submitting tax returns come 7 July 2023.
Although there are significant changes to the trust tax return, SARS managed to keep the look and feel of the return the same as other tax types. 5 major changes have been introduced in the process. Trustees, when submitting a tax return, will now need to declare the following –
Risk of non-compliance and criminal sanction
The amended provisions of the Trust Property Control Act impose harsh penalties on trustees found guilty of non-compliance. This can lead to a fine not exceeding R10 million or imprisonment not exceeding 10 years.
This extends to any tax practitioners, accountants and financial planners, who should be aware that any submission of false documentation or statements on behalf of their clients is considered an offence regardless of negligence. Upon conviction, they may be subject to a fine or imprisonment not exceeding five years.
With this in mind, it is imperative for trustees and/or their advisors to be diligent when approaching the trust return and ensure all documentary evidence is in place. Failing to do so will result in an uncomfortable SARS audit for the trust, and a possibility of tax practitioners expelled from their controlling bodies due to non-compliance. The complexity and cost of operating a trust will definitely be impacted by these changes, as the SARS compliance landscape has completely changed.
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