In terms of sections 34 to 39 of the Tax Administration Act No. 28 of 2011 (“TAA”), when certain transactions are entered into, the details of such transactions must be disclosed to SARS and are known as “reportable arrangements”.
Reportable arrangements must be reported to SARS within 45 business days after the date on which that arrangement qualifies as a reportable arrangement or after becoming a participant in a reportable arrangement. Every participant in a reportable arrangement must disclose the prescribed details regarding the arrangement, such as:
A participant is:
The TAA, as well as the list published in Government Notice 140 (“the Notice”), contains a list of reportable arrangements. The most notable arrangements are as follows:
a. a company repurchase shares on or after the date of publication of the Notice from one or more shareholders for an aggregate amount exceeding R10 million; and
b. that company issued or is required to issue any shares within 12 months of entering into that arrangement or of the date of any repurchase in terms of that arrangement.
a. a person that is a resident makes any contribution or payment on or after 16 March 2015 to a trust that is not a resident and has or acquires a beneficial interest in that trust; and
b. the amount of all contributions or payments, whether made before or after 16 March 2015 or the value of that interest exceeds or is reasonably expected to exceed R10 million, excluding any contributions or payments made to or beneficial interest acquired in any—
(i) portfolio comprised in any investment scheme contemplated in paragraph (e)(ii) of the definition of “company” in section 1(1) of the Income Tax Act; or
(ii)foreign investment entity as defined in section 1(1) of the Income Tax Act.
a. has carried forward or reasonably expects to bring forward a balance of assessed loss exceeding R50 million from the year of assessment immediately preceding the year of assessment in which the controlling interest is acquired; or
b. has or reasonably expects to have an assessed loss exceeding R50 million in respect of the year of assessment during which the controlling interest is acquired; or
c. directly or indirectly holds a controlling interest in a company in paragraph (a).
a. that is a resident; or
b. that is not a resident that has a permanent establishment in the Republic to which that arrangement relates, of consultancy, construction, engineering, installation, logistical, managerial, supervisory, technical or training services, in terms of which—
a. a person that is not a resident or an employee, agent or representative of that person—
b. the expenditure in respect of those services under that arrangement—
The following arrangements are specifically excluded as reportable arrangements under section 36(4) of the TAA:
Failure to disclose the reportable arrangements will result in severe penalties. Participants other than the promoter are subject to a penalty of R 50 000 per month, whilst the promoter is subject to R 100 000 per month (up to a maximum of 12 months).
In light of the severe penalties that can be incurred, it is advised that the requirements of a reportable arrangement must be considered before entering into transactions.