[Question] OFFSHORE INCOME

[Marc CB]

I have a question relating to Offshore income post obtaining Tax amnesty.

I am a UK accountant (non-tax specialist) and have a client who is South African resident who is retired with a Family trust in South Africa and a legacy Trust Fund in Switzerland.

He has made all declarations to SARS as part of the amnesty program, and made the elective to keep the funds off shore.

My client wants to wind the Swiss trust up and have funds appointed to him as sole beneficiary and transferred to Jersey (Channel Islands) where these funds (more than £100K - Less than £1million) are to be used for incidentals such as travel and holidays, i.e. all expenditure outside of SA.

He is under the impression that the tax amnesty covered past and future earnings on the offshore amounts, and therefore can wind the trust up and any interest or dividends on the Jersey funds will be protected from SA income tax.

This is not my understanding and wonder if someone could point me in the right direction in SARS website on the rules re offshore investment dividends and interest when held outside of a trust, and the impact of it being retained in the trust.

I look forward to any assistance.
M

[Dave A]

I'm not aware of any of the tax amnesties (and there have been a few) that cover future earnings. Further, it would seem to defeat the very purpose of these amnesties - essentially to broaden the tax base by removing historical obstacles to future compliance.

I quietly suggest your client should evaluate his options under current tax regimes. This recent article might prove helpful in that regard.

[Marc CB]

Thanks - that is my understanding too and that article was useful.

To avoid any doubt, i did advise my client to seek SA Tax advice and this is purely for my own understanding.

Thanks again Dave!
PS Great forum!