Beneficial Ownership Register

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Beneficial Ownership Register

• 14 November 2023
• Trusts
• The Tax Faculty Tax Specialist

This FAQ article is based on tax law for the year ending 29 February 2024.

1. The Problem / Facts

When doing beneficial ownership for a trust how far do you need to go back with distributions to beneficiaries if they are not named beneficiaries? Especially beneficiaries who only received a once-off distribution?

2. Applicable Law 

Trust Property Control Act, Act 57 of 1988 (TPCA)

3. Application of the Law to the Facts

The TPCA requirements for beneficial ownership came into effect from 1 April 2023.  It is not interpreted that trustees now have to report retrospectively. It is anticipated that the BO register would reflect the beneficial owners at the time or at least the last financial year. The BO register submitted to the master should correlate with the BO resister submitted to SARS, therefore it might require ongoing maintenance.

The trustee is obliged to identify the “warm body” who is the beneficial owner/s. 

• The natural person(s) who directly or indirectly ultimately own the trust property.

• The natural person(s) who exercises effective control over the administration of the trust arrangements that are established pursuant to a trust instrument.

• The founder of the trust and all natural persons ultimately behind the founder, if same is a legal person, partnership, or trust.

• Each trustee of the trust, and all-natural persons ultimately behind the trustee(s), if same is a legal person, partnership, or trust.

• Each beneficiary of the trust, and all natural persons ultimately behind the beneficiary, if same is a legal person, partnership, or trust.

The trustee therefore has to as far as possible even when beneficiaries are unnamed determine who the beneficial owner is.  Let’s say the beneficiary is named and it further states and his descendants.  In that case, the trustee will have to as best s/he can determine who the descendants are.  Where the trustees have made a distribution to an unnamed decided as per the trust deed, the descendent becomes known when the distribution is made.  In that instance, that person then becomes the beneficial owner and is reported as such both to the master and SARS.

4. Conclusion  

The Trust Property Control Act, Act 57 of 1988, mandates adherence to beneficial ownership requirements from April 1, 2023. Trustees aren't obliged to report retrospectively.  Focus on maintaining a Beneficial Ownership (BO) register reflecting the present owners. The trustee must identify the beneficial owner, considering various criteria. Even where beneficiaries are unnamed, the trustee should apply some form of diligence to determine as far as is reasonably possible the beneficial owner.

 

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