Supporting Documents for Approval of International Transfers (AIT)

1 August 2023 – Distribution of funds to non-resident Trusts by resident Trusts
It has been the practice of SARS not to approve the release of funds when resident Trusts make distributions to non-resident Trusts. Following queries in this regard, SARS herewith clarifies its stance on the matter and confirms that it will consider approval for the release of funds/amounts distributed to non-resident Trusts. The process required to obtain the necessary approval is to apply for a manual letter of compliance at SARS by emailing [email protected] .

SARS has taken note of the fact that the SARB has relaxed certain exchange control requirements but has decided, based on the risks involved, to introduce the above-mentioned requirement to mitigate the risks.

SARS will perform verification processes to ensure that strict interpretation of the relevant sections of the Act are complied with. Note that the non-resident Trust must be a beneficiary of the resident Trust, and the distribution will be considered by SARS only if it complies with the terms and conditions in the Trust instrument of the resident Trust.

SARS will allow such distributions only if the resident Trust demonstrates that all tax liabilities in respect of the distribution were or will be settled.

Supporting documents for TCS for foreign investment allowance

When you apply for a Tax Compliance Status (TCS) in respect of foreign investment allowance for individuals, you are required to submit the following supporting documents:

• Relevant material that demonstrates the source of the capital to be invested. For more information regarding the supporting documents required in relation to the source of capital that you have specified on your application, refer to the section below detailing the requirements per source.
• Statement of assets and liabilities for the previous three tax years (this should include disclosure of all investments, loan accounts and distributions from local and foreign companies, trusts, etc.)
• Applicable Power of Attorney where the TCS application is submitted by a person other than the taxpayer.

Non-Resident Applications

• Relevant proof that the taxpayer has ceased to be a resident for tax purposes in South Africa, including the date on which the Taxpayer ceased to be a resident is required to be submitted.
• Detailed Capital Gains Tax Calculation schedule relating to any tax payable on deemed disposal of assets on the day before the taxpayer ceased to be a tax resident, in accordance with Section 9(H)(2) of the Income Tax Act.
• If the non- resident application is for a family unit and one or more members of the family unit are registered for tax purposes, they must apply separately to be issued with a TCS Pin.

Note: In respect of the withdrawal of retirement funds (lump sum benefits from pension preservation, provident preservation and retirement annuity funds) when South African Residents ceased to be resident for tax purposes in South Africa, payment of lump sum benefits to such individuals shall only be allowed if the individual member has remained non-tax for at least three consecutive years.

Crypto Trading Applications

Taxpayers engaged in Crypto/Arbitrage trading need to take cognisance of the fact that when completing the AIT TCR01 SARS application form, that the correct “International Investment Type Details” must be completed being Crypto Assets. SARS holds the view that when the AIT TCR01 application is submitted it is a declaration by the taxpayer that the content of the said application is true and correct. Incorrect applications in this regard submitted to SARS will be declined.

Supporting documents proving source(s) of the total value of the Approval of International Transfer

In addition to the general supporting documentation listed above the following specific documents that prove source(s) of the Total Value of an International Transfer must be submitted and attached to the case:

• Savings / Cash:
  • Bank statements issued no longer than 14 days before the date that the AIT application is submitted reflecting the cash/ savings value.
  • Supporting documents that prove where the cash/ savings originated from.
  • Distributions from a Trust:
    • Copy of Trust deed / instrument.
    • Copy of the latest Letters of Authority (LoA)-As issued by the Master of the High Court
    • Resolutions by the trustees of the resident Trust making the distributions.
    • Details of the source(s) of funds distributed by the Trust.
    • Bank statements of the applicant, relating to the AIT application (issued no longer than 14 days before the date that the AIT application is submitted).
    • The most recent share portfolio statement of the Trust (not older than a month). This statement must include a description, the number of and current market value of the shares.
    • Most recent Financial Statements/ Annual Financial Statements of the Trust.
    • A declaration of the donation (IT144).
    • Bank statement of the donor issued no longer than 14 days before the date that the AIT application is submitted, reflecting the donation paid.
    • Bank statement of the donee issued no longer than 14 days before the date that the AIT application is submitted, reflecting the donation received.
    • Proof (copy of the receipt) of donations tax paid (not applicable to donations between spouses or where other exemptions apply)
    • Inheritance:
      • A copy of the Final Liquidation & Distribution account stamped and signed by the Master of the High Court.
      • Bank statement issued no longer than 14 days before the date that the AIT application is submitted, reflecting the inheritance received.
      • Between individuals:
        • The signed loan agreement.
        • Bank statement issued no longer than 14 days before the date that the AIT application is submitted, reflecting the loan amount.
        • Details of the source of capital of the lender.
        • Bank statements of the borrower, issued no longer than 14 days before the date that the AIT application is submitted, showing the loan amount.
        • The completed and signed loan agreement.
        • Copy of the Trust resolution signed by the trustees of the Trust.
        • Bank statement of trustee or beneficiary, issued no longer than 14 days before the date that the AIT application is submitted, showing the loan amount.
        • Most recent Financial Statements/ Annual Financial Statements of the Trust.
        • The signed loan agreement.
        • Bank statement of the borrower, issued no longer than 14 days before the date that the AIT application is submitted, showing the loan amount.
        • Company’s latest annual financial statements.
        • Sale of property:
          • Original letter of the Conveyancer to confirm the transfer of the property and that the funds will be transferred from the conveyancer’s trust account; or
          • Proof of receipt of the proceeds in the applicant’s bank statement issued no longer than 14 days before the date that the AIT application is submitted.
          • Where the property was jointly owned, the proceeds of the sale to be clearly divided as per source document(s).
          • Capital Gains Tax calculation on the sale of property.

          Note: Non-residents sellers disposing of a local property must adhere to the provisions of Section 35A of the Income Tax Act. The SARS External Guide can be accessed through the following link: IT-PP-02-G01 – Amounts to be withheld when non-resident sells immovable property in SA – External Guide.

          • Sale of Shares and other securities:
            • Capital Gains Tax calculation for the disposal if the shares/securities have been disposed of by the date of the application.
            • Portfolio statement reflecting the value of shares, (share portfolio) not older than a month, if the shares have not been disposed of by the date of the application This statement must include a description, the number of and current market value of the shares.
            • Documentary proof of the transaction(s) if the shares were disposed of by the date of the AIT application.
            • Trading account statement reflecting the trade of the crypto asset.
            • Bank statement, issued no longer than 14 days before the date that the AIT application is submitted, reflecting the amount available for transfer.
            • Details of the locally listed securities that the Taxpayer will be transferring to an exchange that is outside South Africa.
            • Copies of relevant supporting documents relating to the transfer.
            • Schedules of the interest / dividends received indicating the source and amount of interest / dividends.
            • Source and amount of royalty income.
            • Proof of royalty payment.
            • Details of the earnings and documentary proof of earnings.
            • The policy number noting that the institutional insurer will apply on behalf of the taxpayer.
            • The nature of relationship with the entity.
            • Proof of amounts/distribution received from such entities.
            • For an owner of any businesses, the company group structure, profile and other group investments.
            • If a director of company is a shareholder or member of a Close Corporation, a shareholder’s agreement and share incentive scheme agreement.
            • Documentary proof and explanation.