SARS to clamp down on trusts - CNBC Africa

SARS to clamp down on trusts

Southern Africa

by Trust Matsilele 0

The new tax return is designed to provide SARS with much more detailed information about all the role-players within a trust and greater disclosure of the activities within the trust.

This intervention promises to revolutionise the way in which trusts are administered and used in tax planning.

(READ MORE: Moyane to lead SARS through economic headwinds)

“Trusts have been given a bad name by a minority of people who have used them solely for the purpose of avoiding or postponing tax,” said Ettiene Retief, chairperson of the National Tax Stakeholders Committees at the South African Institute of Professional Accountants.

“Now SARS will be in a better position to understand exactly who the founder, trustees and beneficiaries are – and, by connecting all the dots, establish whether the trust is being used improperly,” added Retief.

Retief said under the old tax return, trusts only had to submit abridged information regarding the trust. This meant that those wanting to use the trust to hide wealth or avoid tax could make it very hard for the taxman to connect the dots. 

“Another technical factor that has been exploited by illegitimate trusts is that trust deeds are not digitised, meaning that unless one happened to know that a certain individual was involved in a particular trust, it was hard to request a trust deed,” said Retief.

“There is no electronic search facility that could be used to easily find beneficiaries, and required you to obtain a copy of the trust deed. In other words, the information is available, but difficult to access.”

Retief adds that now all that information will make its way via the new return onto the SARS databases, and thus make it easier for the revenue service to link role-players in a trust with individual taxpayers, and the shifting of funds.

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Retief said trusts were being abused by only a small minority, but cautions that those setting up trusts for legitimate purposes need to ensure they are being administered correctly.

“We must never forget that trusts have a specific purposes, and fulfil a very useful role in society,” said Retief.

“I am hopeful that this new development will flush out abuse, and that trusts will regain their good name as legitimate financial and legal instruments.”

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