A trust refers to a legal arrangement that allows someone to hold assets, without ownership, for the interest of the people for whose benefit the trust is administered.
There are two main types of trusts:
- A trust between living persons, created by living persons through an agreement and
- a testamentary trust which is created in terms of a will.
Trusts are governed by the Trust Property Control Act 57 of 1988, the primary statute of the South African Trust Law, and it is the duty of any trustee to:
- act honestly and in good faith,
- act with due care, skill and diligence concerning the best interests of beneficiaries,
- avoid conflicts of interest, and
- not to profit from the trust.
As of 1 April 2023, SARS requires trustees in South Africa to disclose the details of the trust beneficiaries, thus ensuring more transparency about those who gain from the trust’s wealth. Trustees must lodge and keep up-to-date records of the beneficial ownership of the trusts, the trust founders, other trustees and any person holding control. Should trustees in any way fail to comply, they may face steep financial penalties, imprisonment of five years and further sanctions by the Master of the High Court.
Furthermore, trustees must submit third-party (IT3(t)) returns disclosing net income, capital gains and distributed capital amounts granted to beneficiaries by no later than 30 September of the same year. Since 14 February 2023, SARS aims to record all beneficial owners of newly registered trusts within trust environments.
PRN Advisory & Tax Services has the in-depth industry knowledge to ensure you remain compliant. Contact us today for advisory services tailored to help you report correctly.