Trustee tips for complying with SARS' new TRUST distribution reporting requirements

SARS has been engaging with stakeholders, including representative bodies of tax practitioners, on the requirement for resident TRUSTS to declare distributions through a new income tax return. This change will help SARS keep track of TRUST funds and ensure that taxes are paid correctly.

If you are a Trustee, you will need to start declaring TRUST distributions on a real-time basis. SARS ideally wants monthly reporting on any amounts vested or distributed with a final report due at the end of February, even if you are a Trustee of a small family or investment TRUST.

In future, as a Trustee:

All decisions around the distribution of income or vesting amounts need to be made before year-end, and ACCURATELY documented (in minutes) to prove that the distributions were done in the assessment year. If there is insufficient proof SARS can raise an understatement penalty and will tax the TRUST (the beneficiaries will then need to claim the deducted tax on their income).

Trustees should ensure that all management accounts are regularly prepared (at minimum, the Annual Financial Statements should be prepared and finalised timeously after the financial year end).

Educate the beneficiaries on the importance of submitting accurate returns. SARS has warned that the revenue service will invoke all measures provided for in legislation if TRUSTs and their beneficiaries intentionally negate their legal obligations.

Bullivant Accounting and Tax Services advise Trustees of TRUSTs, no matter how small to implement annual meetings, signed minutes, monthly management reports and Annual Financial Statements. Putting these processes in place sooner than later will save you unnecessary penalties and taxes.

Get in touch with Bullivant Accounting and Tax Services to strategise the best approach for your TRUST.