A distribution from a South African Trust to an Offshore Trust is subject to specific conditions:
Trustees must seek tax advice before implementing a trust-to-trust distribution. Given the high volume of inquiries on this matter, Helfin Private Wealth is well-equipped to assist. To ensure proper applications and approvals, we have partnered with tax practitioners to provide expert guidance throughout the process.
South African trusts may transfer funds to an offshore trust, provided certain conditions are met:
- A South African Trust is required to obtain tax clearance from SARS before proceeding
- SARS will conduct a verification process and provide a Manual Letter of Compliance upon completion
- Once the SARS letter is obtained, the South African Trust must seek SARB approval to externalise the funds
- The Offshore Trust must be designated as a beneficiary of the South African Trust
- SARS will assess the distribution only if it fully adheres to the terms and conditions outlined in the South African Trust’s instrument
- SARS will permit such distributions only if the resident trust proves that all associated liabilities will be fully settled.
The following criteria must be met for the SARB application:
- Since this transaction is not included in the Exchange Manual for Authorised Dealers, each case must secure SARB approval
- A copy of the Trust Deed, including the list of beneficiaries for both the Local and Offshore Trusts, is required
- A copy of all amendments made to the Trust Deed is required
- A copy of the Local Trust’s financial statements for the past three years, including the current year, is required
- A copy of the signed resolution, along with details on how the Offshore Trust was funded, is required
- A letter detailing the rationale for transferring funds from a Local Trust to an Offshore Trust, along with confirmation of the relationship between the two entities, is required
- For the Offshore Trust, provide supporting documentation detailing its establishment and identifying its beneficiaries
Costs:
- Onboarding: Helfin Private Wealth facilitates the South African Trust’s account setup with an authorized dealer, at no cost for opening or maintaining the account
- SARS clearance: Due to the specialized nature of these requirements, the cost of the SARS application will be based on the tax practitioner’s hourly rate for time spent on the matter
- SARB approval: Helfin Private Wealth will facilitate the SARB approval process through the Authorized Dealer, with the applicable Authorized Dealer costs
Please note that any information in our posts, documents, infographics, emails etc is general information and should not be considered as providing financial advice. We therefore disclaim all liability and responsibility arising from any reliance placed on such information by any reader, client or visitor to our website. Though we make every effort to ensure the accuracy of the information provided we accept no liability for any inaccuracies.