Trust and PBO reporting requirements are now official.
Public benefit organizations (PBOs) and Trusts, but not solar panel installers, are now included on the final list of third-party data providers required to transmit taxpayer information to the South African Revenue Service (Sars).
Trusts and PBOs are permitted to report for the first round voluntarily in September of this year, but beginning in 2024, they will be required to file third-party reports by the end of May every year.
Trusts must now file IT3(t) reports to Sars by 31 May of the following year, which include details on any funds distributed to beneficiaries of trusts between 1 March and the end of the next year, including income, capital gains, and capital amounts.
According to the South African Institute of Chartered Accountants (Saica), this won’t be easy. A previous submission to Sars notes that most of the data needed to create trust financial statements is typically only accessible in April or May.
Trust income is frequently produced in relation to other assets, such as loan accounts in private corporations, and this information is only available after the underlying company’s financial statements have been finalized. This presents another challenge. This might occur between the end of the fiscal year in February and the following January.
Except for collective investment schemes (CIS) and employment share incentive scheme trusts (ESIST), all trusts—resident and non-resident—must submit third-party returns to Sars.
Saica also proposed the phasing in of the reporting obligations over a few years and providing training to PBOs and trustees on data submissions.
In the future, all PBOs that issue Section 18A certificates for contributions that are tax deductible must submit their data reports.
Saica suggested that Sars consider requiring reporting from taxpayers who earn more than a particular amount. However, this was not done.
They also suggested educating PBOs and trustees on data submissions and phasing in the reporting requirements over a period of years.
The method for sending third-party data is complex, especially when sending lots of information through HTTPS. The appropriate Sars electronic filing service must be used to submit the declarations online.
Saica requests a postponement to 2025 in its August 2022 filing so taxpayers will have a year to put systems in place before gathering data in 2024 for reporting in the 2025 calendar year. This suggestion was rejected.
PBOs will be required to provide Sars with bi-annual reports. The initial submission, which will cover the months of March through August, is due on 31 October. The second submission, covering the period beginning on 1 September and ending on 28 February, is due on 31 May.
In the future, they will need to turn in reports for each of these times.
To include the information in the Sars reports, an 18A [tax-exempt institution] PBO must save the data represented in the 18A certifications.
This is new for PBOs, but it won’t be too difficult to maintain if they install it once and keep the information handy.
With effect from 1 March 2023, Sars will require the 18A certifications to contain more specific information.
Up until the end of February, the only information needed for a Section 18A certificate to be valid was the PBO’s name, reference number, address, and phone number; the donation’s details (date of receipt, amount, and type, if it wasn’t made in cash); the donor’s name and address; and a statement that the donation would only be used for qualifying public benefit activities, like education, welfare, and healthcare.
The certificate must additionally contain the following donor information as of 1 March:
- Donor type (individual, business, or trust);
- The donor’s trading name, if it differs from their legal registered name.
- Identity type and issuing country (if a natural person);
- Registration number or identification number;
- Telephone number & email address;
- Income tax reference number;
- A distinctive receipt number
All PBOs that provide funding to other PBOs, a closed list of organizations affiliated with the United Nations and others, and any government agency that Sars has authorized to engage in activities for the public good are considered 18A entities.
Solar Not Included
People who give conformity certificates for solar installations of new and underused solar panels at a dwelling were also listed as third-party data providers in the March draft notice.
The final notice, released in June, did not include them.
Saica pointed out that, given that this reporting would have been completed for a single year (the rooftop solar incentive for people is just for a single year), it could have been more reasonable and rational.