If you entered into certain transactions, disclosure in the prescribed tax return may not be enough. You could also be required to report these transactions if they are regarded as reportable arrangements. Failure to report a reportable arrangement could result in penalties of between R50 000 and R3,6 million.
Why is there a reportable arrangement regime?
SARS uses the reportable arrangement regime for statistical purposes, i.e. to collect data on certain specified arrangements.
When is an arrangement reportable?
An arrangement is reportable if:
- A tax benefit was derived and the arrangement displays one of the specific characteristics contained in section 35(1) of the Tax Administration Act (2011); or
- It is listed by the Commissioner in a Public Notice. The arrangements currently listed are:
- Certain redeemable preference shares;
- Qualifying share buy-backs and issues;
- Qualifying contributions to a non-resident trust;
- The acquisition of a controlling interest in a company with an assessed loss exceeding R50 million;
- Certain services rendered by foreigners.
Do you have to report an arrangement even if no tax benefit was derived?
If the arrangement is listed by the Commissioner in a Public Notice, the arrangement has to be reported even if no tax benefit was derived.
When must a reportable arrangement be reported?
A reportable arrangement must be reported within 45 business days after the date on which it qualifies as a reportable arrangement.
How do you report a reportable arrangement?
A reportable arrangement is reported by completing the RA01 – Reporting Reportable Arrangements – External Form.
Can you report a reportable arrangement via SARS eFiling?
Currently, a reportable arrangement cannot be reported via SARS eFiling. Reporting is done by sending the completed RA01 to the following e-mail address: Reportable@sars.gov.za . Remember to retain the automatically generated electronic acknowledgement receipt!
Typical examples of where we considered or encountered reportable arrangements were with mergers and acquisitions (m&a tax), corporate restructurings and corporate tax planning. We also encountered reportable arrangements when assisting with corporate tax compliance if certain transactions entered into by our clients met the requirements as listed by the Commissioner.
It is advisable to frequently perform a high-level review of transactions to confirm whether or not there are arrangements that need to be reported.
Need help in identifying or reporting a reportable arrangement? CLICK HERE