New Rules for Trust Ownership in South Africa explained

What is the new law for trusts in South Africa?

Starting from April 1, 2023, South Africa is implementing new rules regarding the disclosure of trust ownership. These regulations, a part of the Trust Property Control Act, are aimed at improving transparency within trust ownership. Here’s what these changes mean for the trustees, beneficiaries, and the general public:

  1. Enhanced Transparency in Trust Ownership

The new rules mandate the trustees to:

  • Identify and record the true owners of the trust
  • Keep an up-to-date record of detailed information about these owners
  • File this information with the Master’s Office

The required information includes names, dates of birth, contact details, tax numbers, and other relevant details.

  1. Who’s Considered a Beneficial Owner?

The term “beneficial owner” is broad and covers a wide range of individuals, including:

  • Founders
  • People in control of the trust
  • Beneficiaries
  • Trustees

Special care needs to be taken with discretionary beneficiaries, and if you fall into this category, seeking professional guidance is recommended.

  1. Hefty Penalties for Noncompliance

If the rules are not followed, the penalties can be severe – fines of up to 10 million Rand or imprisonment of up to five years, or both.

  1. Restricted Access to Information

While transparency is the goal, access to the disclosed information will be limited to certain government bodies such as the National Prosecuting Authority and the South African Revenue Service (SARS).

  1. Additional Reporting Requirements by SARS

In addition to the new rules, SARS has introduced its reporting requirements for trustees. Trustees now become “third-party data providers,” similar to banks and insurance companies. Trustees must submit an IT3(t) form, detailing demographic and financial information, for each trust by September 30th every year. This adds to the compliance and administrative tasks for trustees and may create practical difficulties.

  1. Electronic Submission of Data

Depending on the number of records, the data must be submitted electronically using various methods:

  • e-filing for fewer than 20 records
  • Hypertext transfer protocol secure for 21-50,000 records
  • Connect Direct bulk data filing for more than 50,000 records

  1. IT3 Data Submission

SARS published an extensive 272-page document outlining the process and requirements for IT3 data submission. The document includes detailed information on what must be reported, from demographic information to all financial flows.

New Rules for Trust Ownership and The Trust Property Control Act: Book a Consult Today

The new rules significantly change the landscape for trusts in South Africa. If you are a trustee, beneficiary, or involved in the administration of a trust, it’s critical to understand these new regulations and seek professional guidance from our Wills and Estate Attorneys at PM Attorneys. The requirements are complex, and noncompliance carries heavy penalties.

These changes reflect the broader move towards greater transparency in the financial sector and highlight the need for trust owners and administrators to ensure that their operations are in full compliance with the law. Even if you are not directly affected by these regulations, they signify a continued commitment to transparency and fairness in the South African financial landscape. Contact us for all your new tax regulations queries.