ARE YOU AS TRUST BENEFICIARY AT RISK FOR A TAX VERIFICATION?

The taxation of ‘wealthy’ South Africans and their associated trusts, is one of SARS’ main

focus areas.

In its 2021-2025 Strategic Plan, SARS has made it clear that “Taxpayers who negligently,

deliberately, aggressively, or criminally stay out of the tax system, or do not comply, will be

detected.”

Trustees and financial institutions may in future be required to declare amounts vested or distributed to trust beneficiaries, in the form of periodic and regular reporting, otherwise known as, real-time-API.

What is a real-time API?

A real-time application programming interface (API) is a service that enables users, for example SARS to automatically obtain information in real-time from one or more data resources. API can be embedded in a software application feeding to a website.

‘API’ is the acronym for Application Programming Interface, which in short is a software intermediary that allows two applications to talk to each other, in other words, it allows for data to be pushed instantly to endpoints.

It means that data is pushed upstream over a connection, versus a pull mechanism used by

the request/response pattern.

We are already familiar with institutions, employers, VAT vendors and customs traders having to submit third party data supplying several sources of South African administrative

tax data to SARS. Examples of these data type of reports are IRP5, EMP201, IT3(b), IT3(c),

IT3(e), IT3(s), VAT returns and Medical Scheme Contributions.

It is to be noted that by law the duty to submit a return of information is compulsory in terms

of section 26 of the Tax Administration Act.

These certificates are submitted in terms of the File Transfer Protocol (FTP) and is currently

used to submit data according to the file layout requirements on a direct data flow channel.

As the SARS Risk process often does not have independent data available, against which it

could perform a verification of beneficiaries of trust income, capital or assets, we may soon

be moving to a monthly or real time filing system in respect of trusts.

It is advisable for trustees to consider to move trusts onto a seamless, integrated system.

Contact us at www.sgnkonsult.co.za if your trust administration, accounting and record

keeping, are not compliant.

The SGN Konsult Team