Trust SARS and the Master

It should never be said that our government does not have a fine sense of timing. Three days before Christmas, when most of us were wondering if we applied the appropriate factor sunscreen, our government promulgated the amendments to the Trust Property Control Act (further “TPCA”).

On 31 March 2023 the regulations for its implementation were issued. This was done after lunch time on 31 March 2023, which meant most would only recognize the “issue” the next day.

In true AB de Villiers fashion, the Department of Justice and Constitutional Development (further “the Master”), better known as the courts by the man on the street, issued a media statement on 1 April 2023 effectively stating that these amendments have (do note the use of the past tense) come into effect on 1 April 2023. Taking all into consideration this was unfortunately NOT an April fools joke. The statement was released with the heading “Increased measures for Trusts to combat money-laundering and terrorism financing crimes.” I do trust that you will see the irony in that media release heading.

It is believed that these amendments were brought into effect due to South Africa’s banking system receiving a downgrade as a member of the Financial Action Task Force (FATF).

These amendments read with the amendments to the Financial Intelligence Centre Act (FICA) impacts all parties related to the management of trusts, being independent trustees, trust administrators, trustees and accountants.

WHAT IS REQUIRED?

The information, as stipulated by the FICA, of all Accountable Institutions and Beneficial Owners (Donor, Founder, Trustees, Independent Trustees, Beneficiaries, Trust Administrators and Accountants) must be uploaded via a portal to be supplied by the Master.

Information is currently defined as:

• Certified copies of Identity document
• Proof of address

Whomever enters the information to the portal, must be able to provide a power of attorney from the person on whose behalf the information is entered. This would require the capturer to first obtain such power of attorney from all beneficial owners before being able to upload your trust’s information.

It is worth a mention that the portal is a Google form, linked to an Excel file to which the information and power of attorneys will be captured. MST Group has sought legal advice on the ramifications of using such a portal for and on behalf of beneficial owners as it is common knowledge that the security of a Google form is questionable.

No formal deadline has been set for the submission of the required information, but publications have mentioned an 18-month period from 1 April 2023.

SARS JOINS THE ACT

SARS has been making noises about increasing reporting requirements on third party information, with specific reference to trusts and public benefit organisations (PBO’s). Due to the amendments in the TPCA, SARS has now enforced their wish to obtain information regarding distributions made to beneficiaries.

SARS has published in the Government Gazette that with effect from 1 March 2023:

• The trustees of a resident trust must submit an IT3(t) in respect of any amount vested in a beneficiary including income (net of expenditure) capital gains and capital amounts distributed by 30 September.
• If there are fewer than 20 records, the data must be submitted electronically using e-filing.
• 21-50,000 records, the data must be submitted electronically using the hypertext transfer protocol secure for bulk data filing on e-filing.
• More than 50,000 records the data must be submitted electronically using the Connect Direct bulk data filing on e-filing

This means that all distributions as defined, made by a trust, must be disclosed on an IT3(t) and submitted by 30 September following the trust’s financial year. SARS has already issued a report (Business Requirement Specification) of 272 pages that sets out the process and requirements for the IT3(t) certificates.

The publication is unclear regarding discretionary beneficiaries that have not received any form of distribution.

MST GROUP’s OFFERING

MST Group has entered into a working relationship with a trust administration company to assist, not only on the requirements due to the amendment of the TPCA, but to provide a better and more inclusive trust service in the future. Please keep your eyes open for an email from us announcing the relationship and the services it will offer which will include the amendments and requirements from the TPCA and SARS.