You may or may not yet have taken the brave step of opening that daunting looking envelope with the South African Revenue Services (SARS) logo on the front, which contains your tax return.
If you have, you will have noticed a loose-leaf page headed "Schedule to the return of income - Income from investments from a country other than the Republic" included with the return.
The questionnaire is in four parts and refers you to paragraph 2.3.1.2 of the information booklet for guidance on how to answer the questions it asks. Unfortunately, the information provided on the schedule and in the brochure is insufficient to enable you to satisfy the requirements of the sections of the legislation which it tries to cover (Sections 9C and 9D).
Without detailed knowledge of the legislation, you may find yourself giving an incorrect answer without realising it. Incorrect information on your tax return means SARS may re-open the tax assessment it has issued for that return at any time in the future - quite a risk when you consider that inadvertently making an incorrect statement could result in SARS asking you for more money in respect of this return in, for example, 10 years' time.
It is important to know how to answer the questions.
Although part 1 should be straightforward as it relates to direct investments that you have made, be aware of interest that doesn't necessarily look like interest (s24J) (but that's another topic).
If you can get parts 2 and 3 right, part 4 should fall into place.
Beware of parts 2 and 3. Although "participation rights" are defined in the brochure, the questionnaire does not ask if you have participation rights. It asks if you have any "shares/interest in" (interest is defined as a form of income, so the use of terminology is already confusing). In truth, you need to answer whether you have participation rights in any entity.
This is a broad term, being "the right to directly or indirectly participate in the capital, profits or dividends declared by, or any other distribution or allocation made by the entity". If you are a beneficiary of an offshore trust, or one of many beneficiaries, you would need to answer "yes" to this question.
The questionnaire then asks for details of the entity and the amount of income it received or accrued. In asking if any foreign tax has been "paid in respect of the income received by or accrued to you under items 2 and 3" (part 4), the implication is that any figure you place in the squares 2(e) or 3(f) will be treated as your income for South African tax purposes!
However, if you are one of a number of beneficiaries of the trust, and less than 50 percent of the beneficiaries are South African, particularly if you do not have a vested right in the trust, the income of the trust will not necessarily be taxable in South Africa in your hands. So if you answer the questions without any further explanation you may end up paying more tax than you need to.
You also need to ensure that you answer the question as to whether you have made a "donation, settlement or other disposition" correctly. Although the schedule and booklet do not explain this, South African case law has held that an "other disposition" includes an interest free or low interest loan.
If you have made a donation or settlement, or a low interest or interest free loan to an offshore trust, you may be taxed on some or all of the income received by or accrued to the trust since July 1, 1997, even if that income has been distributed to a non-resident beneficiary.
The time you made the donation or settlement may be of importance because, if it was before you became a South African resident, the income in the trust would not necessarily be taxable in your hands. This would depend on other factors.
Answering the schedule may not be as straightforward as it looks. I would suggest you talk to someone who understands the legislation before you do so. Otherwise, you may face some nasty shocks.