Being the recipient of generational wealth is a huge privilege, but for one unlucky client, her inheritance turned into an expensive lesson in the importance of adhering to SARS regulations.

The client is a South African tax and exchange control resident, and she received inheritance from her late mother’s offshore estate while she was residing aboard. The inheritance was placed directly into an offshore trust and never regularised. As a result, SARS levied a 20% penalty on the current value of the trust.

The breach?

The client should have obtained approval from the South African Reserve Bank (SARB) to retain the funds offshore when she received the inheritance. Should the client not have wished to obtain SARB approval, another course of action would have been to partake in the SARS Special Voluntary Disclosure Program (SVDP). By not taking any action, however, she did not regularise the transaction and thus the 20% penalty was levied.

Our solution

Sentinel reached out to the Head of the SVDP’s Financial Surveillance (FinSurv) Unit and enquired about the best way to take the matter forward. After receiving guidance, we requested that the penalty be waived, provided the client regularise the transaction within 30 days through the authorised dealer at her bank.

Sentinel also assisted the client with legal matters related to retaining the inheritance offshore, especially those concerning FinSurv approval.

Outcome

Because the client had the funds regularized within 30 days, the 20%penalty was waived.

Sentinel goes the extra mile to seek the best possible solution for our clients, while ensuring that we comply with all regulations at all times. Contact us today if you need assistance.