Tag Archives: SARS

Registration of a trust as a taxpayer

The frustration experienced by taxpayers and the complexity of registering a trust as a taxpayer with the South African Revenue Service (SARS), has been widely publicised in recent years. Despite calls from industry bodies for a simplified approach (like companies and individuals), registering a trust as a taxpayer remains an overly complex process.

The inconsistency of information received by taxpayers between the SARS website and different branch offices is one of the areas of major concern. SARS’ website, for example, indicates that either certified or uncertified copies of identity documents are acceptable, whereas branch officers only accept certified copies. Another frustration is requirements that are seemingly not in line with legislation. As an example, SARS requires the appointment, by resolution, of a so-called “main trustee”, whereas the concept of a “main trustee” does not exist in the Trust Property Control Act 57 of 1998. The same act requires that a separate bank account must be used for deposits received by persons in their capacity as trustees of a trust, but SARS seemingly requires some trusts to have bank accounts while not imposing this requirement on others during registration.

Based on recent interactions with SARS, the following guidelines should assist taxpayers in registering trusts as a taxpayer. Although many of the requirements do not seem to agree with what is required by legislation (or sometimes common sense), a call on such formal matters at a branch office will not assist taxpayers and they should rather ensure that the documents below are at hand. All the documents indicated below must be in a certified form:

  • A completed IT77TR form (available on the SARS website);
  • A resolution appointing one of the trustees a “main trustee”. Even if this is indicated in a trust deed, it must be specifically resolved. It is suggested that it is this “main trustee” that represents the trust at the SARS branch office;
  • A resolution authorising the said “main trustee” to sign all documents on behalf of the trust for purposes of registering it as a taxpayer with SARS;
  • Identify documents of all trustees (if you use the new smartcard ID document, ensure that both the front and the back are copied). Note that the trustee doing the registration, must also have their original identity document at the branch;
  • Proof of address for all trustees (ensure that this address on the proof agrees to what is completed on the IT77TR form);
  • Proof of address of the trust. For these purposes, use the CRA01 available on the SARS website to accompany the proof of address. It is suggested that two versions of the CRA01 are completed. One by the “main trustee” and one by a different trustee, since different branch offices require different trustees to complete the form;
  • Proof of banking details. If the bank account is less than one month old, then a letter from the bank confirming that the details are in order. In all other cases, a bank statement is required;
  • The trust deed; and
  • The letter of authority from the Master’s Office.

For good measure it is suggested, if possible, to take all original documents along to the branch as well (only present these if required and ensure it is returned). Also, ensure that a proof of registration and the taxpayer reference number of the trust is obtained after successful registration.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

SARS to intensify action against tax offenders

Despite the fact that SARS has upheld their philosophy of education, service, and thereafter enforcement, they have noticed an increase in taxpayers not submitting their tax returns by the stipulated deadlines, and not settling their outstanding debt with SARS. This is not limited to the current tax year but includes substantial non-compliance across previous tax years.

It is for this reason that from October 2017 SARS will intensify criminal proceedings against tax offenders. Failure to submit the return(s) within the said period could result in:

  • Administrative penalties being imposed on a monthly basis per outstanding return.
  • Criminal prosecution resulting in imprisonment or a fine for each day that such default continues.

Types of tax

SARS has reminded all taxpayers that, according to the Tax Administration Act No. 28 of 2011, it is a criminal offence not to submit a tax return for any of the tax types they are registered. These tax types are:

  • Personal Income Tax (PIT)
  • Corporate Income Tax (CIT)
  • Pay as You Earn (PAYE)
  • Value Added Tax (VAT)

It is also important to note that should any return result in a tax debt it must be paid before the relevant due date to avoid any interest for late payment and legal action. To avoid any penalties, interest, prosecutions as well as imprisonment, taxpayers are urged to rectify their compliance by submitting any outstanding returns as soon as possible. Please contact your tax advisor for assistance.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The Basics of Estate Duty

When a person dies, they leave behind an estate which includes everything they own. Estate Duty is payable on the estate of every person who dies and whose nett estate is in excess of R3,5 million. It is charged at the rate of 20%. Currently, SARS is responsible for collecting the Estate Duty of a deceased person.

How does an estate get reported to SARS?

Even if Estate Duty does not apply to you, it is still necessary to inform SARS that the person is deceased. It is recommended that you consult with a legal expert when going through such as process.

Copies of the following documents must be sent to SARS:

  1. Death certificate or death notice.
  2. Identity document of the deceased.
  3. Letters of Executorship (J238) (if applicable).
  4. Letter of Authority (J170) (in cases where the estate is less than R250 000).
  5. Certified copy of the executor’s identity document.
  6. Power of attorney (if applicable).
  7. The name, address and contact details of the executor or agent.
  8. The last Will and Testament of the deceased.
  9. An inventory of the deceased’s assets.
  10. The liquidation and distribution accounts (if available).

These documents may be sent to the relevant Centralised Processing Centres that is closest to the Master of the High Court where the estate is being administered.

How does Estate Duty work in relation to an inheritance?

All income received or accrued before the deceased’s death is taxable in the hands of the deceased up until the date of death, and will be administered by the executor or administrator acting as the deceased’s representative taxpayer.

  1. After the date of death of a person, a new taxable entity comes into existence – the “estate”.
  2. The assets of the deceased will be held by the estate until the liquidation and distribution account has lain for inspection and become final under section 35(12) of the Administration of Estates Act after which the assets will be either handed over to the heirs or delivered to the trustee of a trust estate.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)