SARS is coming after these taxpayers in 2024

The South African Revenue Service (SARS) is under pressure to boost tax collection in 2024 as the country faces a major budget deficit and little room to close the gap through new revenue sources.

As such, the tax collector has placed a particular focus on going after trusts and their beneficial owners – with SARS saying there is no excuse for failures to do the appropriate filings and pay their dues.

New legislation introduced in 2023 made it so that all trusts registered in South Africa are required to comply with the amended Tax Administration Act No. 28 of 2011, whereby certain additional disclosures are required to be made around a new term referred to as the ‘beneficial owner’ of the trust.

This new definition became effective on promulgation, 22 December 2023, when Government Gazette No. 49947 was released.

According to tax experts at PwC, the National Treasury’s intent with the amendment is to assist SARS in identifying the actual owners of the assets and related income of trusts.

“SARS will be able to assess the accuracy of taxpayers’ tax liabilities or further detect whether taxpayers are committing a tax offence,” the group said.

The amendments faced push-back from the public and other stakeholders, particularly around concerns that the new regulations would add a larger administrative burden to trusts – but SARS quickly dismissed this.

The tax service pointed out that it is already the duty of the trustee to keep and maintain records of the beneficial owner under the Trust Property Control Act. Since this is already a requirement, there shouldn’t be an additional burden.

Beneficial owners

According to PwC, the Trust Property Control Act (TPCA) defines the term ‘beneficial owner’, in respect of the provisions of a trust instrument, to mean:

• a natural person who directly or indirectly ultimately owns the relevant trust property;
• a natural person who exercises effective control of the administration of the trust arrangements that are established pursuant to a trust instrument;
• each founder of the trust;
• each trustee of the trust; and
• each beneficiary referred to by name in the trust instrument or other founding instrument in terms of which the trust is created.

“Additional rules apply where a founder, trustee or beneficiary referred to above is a legal person, a partnership or a person acting on behalf of a partnership or a person acting in pursuance of the provisions of a trust instrument,” the group said.

PwC noted that the TPCA does not specifically provide a definition for ‘beneficiary’, which is defined in the Income Tax Act (ITA).

Differences may therefore potentially arise between the use of ‘beneficiary’ in the TPCA, when compared to the definition of a ‘beneficiary’ in the ITA.

“Only those who are ‘beneficial owners’ as per the TPCA are therefore ‘beneficial owners’ for purposes of the Tax Administration Act,” it said.

Tax in 2024

With effect from 23 June 2023, SARS introduced certain e-Filing enhancements to the income tax return for trusts, which should make things easier for these entities in the 2024 tax year.

These include additional questions included in the return, such as the beneficial ownership declaration page to record all beneficial owners and additional mandatory supporting information that should be disclosed in the return.

In the event that there are more than 20 beneficial owners, the trust must also upload a supporting document that reflects the additional beneficial owners.

Read: Big tax risks for South Africa – as countdown to Budget 2024 begins