The South African Reserve Bank (“SARB”) recently announced a welcome relaxation to its exchange control policy relating to cross-border distributions between trusts (“trust-to-trust distributions”). This development is a significant shift in the regulatory landscape and is expected to ease the administrative and compliance burdens previously associated with such transactions. This development provides some relief for families with international trust structures, particularly in succession and estate planning contexts.
However, while the exchange control framework has shifted, South African (“SA”) taxpayers must remain alert to the legal, compliance and, often, unsuspected income tax implications.