In February 2014 SARS announced that the implementation date of the FATCA Agreement with the USA was 28 October 2014.

What does this mean?

FATCA is the international agreement imposed by the USA on all signatories (which in effect means any country wishing to remain on cordial financial terms with the USA) under which financial institutions must furnish the US tax authorities with details of the names, addresses, account numbers, account balances and income of “Specified US Persons” with those financial institutions. In return, US financial institutions will return the compliment for South African residents with similar investments in the USA.

The agreement defines Specified US Person, broadly, as any person other than a bank, stockbroker, branch of government or similar institution. The common factor in persons excluded from the definition is that they are institutions that are subject to regulatory oversight in their countries. The investment details of any natural person, company or trust with investments in the USA or South Africa must be reported to the authorities of the other state.

February 28 marks the end of the South African tax year when financial institutions furnish investors with details of their investments to enable them to complete their tax returns. Specified US Persons can now expect the details of their South African financial investments to arrive in the hands of the IRS in the USA. Similarly, South Africans with US investment accounts will need to ensure that they include details of these accounts and income in their tax returns to SARS.

The agreement between South Africa and the USA was signed on 9 June 2014 and, in terms of GG Notice No 93, operated from 28 October 2014.