Fyncor Advisory | Client Intelligence Brief

Fyncor Advisory | Client Intelligence Brief | September 2026

Author: Willem J. Oberholzer

Chief Executive Officer

CA(SA) | MCom(Tax) | Chartered Tax Advisor

FYNCOR ADVISORY

10 minutes read time

A recurring theme has emerged from the advisory work, restructurings, trust reviews, estate-planning assignments and technical research undertaken by Fyncor during September.

The difficult tax questions are increasingly arising before the tax return is prepared.

They arise when ownership is changed without first determining value. When a trust resolution says one thing but the accounting records suggest another. When a shareholder’s economic entitlement is confused with legal ownership. When an offshore entity exists legally but the people performing its functions sit somewhere else. Or when an accounting description — “loan”, “fee”, “dividend” or “capital” — is assumed to determine the tax result.

The common thread is straightforward: Commercial intention, legal form, economic substance, accounting treatment, tax treatment and documentary evidence need to describe the same transaction. That principle runs through virtually every significant matter we worked on during September.

In This Edition

• Trusts: the data is beginning to meet the legal documents
• Family businesses: ownership, economic entitlement and control are not the same thing
• Restructuring should protect tomorrow without accidentally taxing yesterday
• Estate planning: equal inheritance does not require identical structures
• Tax residence: prove the history before changing the SARS record
• Offshore structures: substance has become an operating question
• UAE Pillar Two: labels do not determine exclusions
• Fees can sometimes behave more like interest than service charges
• VAT: evidence is becoming part of the architecture
• SARS correspondence: the first response may become the dispute file
• What should boards, business owners and trustees do now?
• Fyncor closing insight

Trusts: The Data Is Beginning To Meet The Legal
Documents

Trust compliance has become one of the clearest examples of tax administration moving towards data reconciliation rather than isolated tax-return preparation.

SARS opened the 2026 Trust Filing Season on 19 September 2026. The IT3(t) third-party data submission is due by 30 September 2026, while the ITR12T filing deadline is 22 January 2027. Of greater significance is what now happens to that information.

For the 2026 filing season, IT3(t) information is used to pre-populate relevant information in the ITR12T and beneficiary tax returns, including the ITR12 and ITR14 where applicable. SARS has also expanded the trust return around beneficial ownership and the section 25B loss-limitation rules. Pre-population, however, does not determine the correct legal or tax treatment.

A number appearing in a beneficiary’s return does not establish that income was legally vested in that beneficiary. A credit entry in a loan account is equally not, by itself, proof of an effective vesting. The evidence should start with the trust deed and then move through trustee authority, properly adopted resolutions, the legal nature and timing of the vesting, accounting records, beneficiary loan accounts, payment records and finally the IT3(t) and tax returns.

September’s work reinforced a principle that trustees should take seriously: The trust tax return should be the final expression of the trust’s legal and accounting records — not the document from which those records are reconstructed. Where historic trust records, loan accounts, distributions and beneficiary entitlements have drifted apart, trustees should consider a formal reconciliation before filing.

Family Businesses: Ownership, Economic Entitlement And Control Are Not The Same Thing

Several restructuring matters considered during September involved successful family businesses whose value had grown far beyond what was contemplated when the original structures were established. That creates a particular planning problem.

A family may want to introduce the next generation, protect an existing founder, establish a holding company, segregate legacy value or create a platform through which all future expansion will occur. The commercial objective may be sensible. But moving today’s business into tomorrow’s structure without first identifying where today’s value resides can create significant tax and commercial consequences.

For example, replacing an existing ordinary shareholding with a preferential right to future dividends may preserve a stated monetary amount on paper while materially changing the commercial value of the shareholder’s rights. A right to receive a specified amount from future lawful dividends is not necessarily equivalent to presently owning shares worth that amount. Future profits must first be earned. Cash must exist. Company-law requirements must be satisfied.

Directors must declare the dividend. Tax may then arise.

The September lesson is therefore important for owners contemplating succession: Value the existing rights before changing them, and value the proposed rights afterwards. If the economic position has changed, calling both amounts “R10 million”, “R50 million” or “historic value” does not make them commercially equivalent.

Restructuring Should Protect Tomorrow Without
Accidentally Taxing Yesterday

One particularly useful strategic approach arising from recent work is the separation of a legacy structure from a future-growth structure.

Rather than attempting immediately to move every contract, asset, employee, shareholding and historic liability into a new group, it may sometimes be preferable to establish the new architecture first and direct future expansion through it. The historic business can then remain where it is while its value, ownership, tax attributes and potential restructuring consequences are properly established. This can materially reduce execution risk, but it does not make the later restructuring tax-free.

Where shares are exchanged, converted, subscribed for, repurchased or transferred, South Africa’s corporate reorganisation provisions, capital gains tax rules, dividends-tax provisions, contributed-tax-capital rules and anti-avoidance provisions may become relevant.

The order of transactions matters. The lesson is not that restructuring should be avoided. It is that a restructure should be treated as an implementation project rather than an organogram exercise.

Estate Planning: Equal Inheritance Does Not Require Identical Structures

Another major area of work during the month involved family-owned businesses, trusts, succession planning and the separation of economic interests between family members. These matters demonstrate why tax planning cannot be separated from family governance.

Where significant assets have appreciated substantially over many years, a decision to move an asset from a company, trust or family investment structure can crystallise tax that has effectively remained deferred while the asset remained within the structure. The important question is therefore not merely: “Who should own the asset?” It is: “What tax event occurs when ownership changes?” Capital gains tax, dividends tax, trust taxation, donations tax and the tax treatment of loans can interact with company law, trust law, matrimonial arrangements and succession planning. We have seen repeatedly that changing the legal ownership of an asset simply to achieve a family or commercial objective may create unnecessary tax leakage.

Sometimes the better solution is to restructure rights, governance or economic participation while leaving valuable underlying assets where they are. The principle is particularly relevant to owners of mature family businesses: restructuring should begin with a map of the existing tax attributes and embedded gains before anyone signs a transfer agreement.

Estate planning: liquidity matters as much as inheritance

Cross-border family succession has been another major theme during September. Families increasingly have children and grandchildren living permanently in different tax jurisdictions while the principal wealth remains South African.

This produces a planning trap.

Parents understandably start from the proposition that beneficiaries should be treated equally. It is then tempting to conclude that each beneficiary should inherit through an identical structure. That is not necessarily correct. Two beneficiaries can receive equivalent economic value while requiring materially different legal structures because their residence countries tax trusts, companies, distributions, capital gains and inherited assets differently.

September’s estate-planning work also reinforced an older but frequently overlooked principle: Estate duty is only one part of estate planning. Liquidity determines whether the plan can actually be implemented. An estate containing substantial investments, private-company shares or trust loan accounts may have considerable value while still lacking the cash required to settle tax and administration liabilities.

Tax Residence: Prove The History Before Changing The
SARS Record

Tax-emigration and residence matters during September again demonstrated why residence is fundamentally a factual enquiry. A foreign residence permit, foreign tax number or historic move overseas may be useful evidence, but no single document necessarily determines when South African tax residence ceased.

The stronger approach is to reconstruct the person’s life contemporaneously. This distinction matters because the date on which SARS’s administrative record is changed does not necessarily determine the underlying legal date on which residence ceased.

The proper sequence is: facts first, legal conclusion second, historic tax reconciliation third, SARS regularisation thereafter. Trying to begin with the desired cessation date and then finding documents to support it reverses that process.

Offshore Structures: Substance Has Become An Operating Question

Our UAE and international structuring work during September continued to demonstrate that “substance” is moving beyond traditional questions about offices and board meetings. The more useful question is: Which entity actually does the work?

Where an operating company conducts licensed activities, its employees, payroll, management responsibilities, commercial contracts, expenditure and decision-making should generally align with that activity. A family foundation or holding vehicle may own the operating company and perform genuine ownership, succession or governance functions.

That does not automatically make it the appropriate employer or operating paymaster for the subsidiary’s staff. This distinction is important in the UAE, particularly where Free Zone businesses seek to demonstrate genuine commercial substance. The legal structure should reflect the functional structure: the holding vehicle holds; the governance vehicle governs; and the operating company operates.

Blurring these functions can create regulatory, tax, accounting and evidentiary problems even if all the entities are validly incorporated.

UAE Pillar Two: Labels Do Not Determine Exclusions

Our recent research into UAE Pillar Two produced a related lesson. The UAE Ministry of Finance issued Ministerial Decision No. 133 of 2026 on 25 August 2026 setting out entities required to file the Pillar Two Information Return under the UAE Top-up Tax regime. It applies to fiscal years commencing on or after 1 January 2025.

For groups within the Pillar Two framework, labels such as “investment company”, “family investment vehicle”, “holding company” or “foundation” should not be treated as tax classifications. The applicable rules contain specific tests for Excluded Entities and Investment Entities, including ownership and activity requirements.

For affected groups, classification therefore requires an entity-by-entity examination of ownership, activities, income, consolidation and elections. The broader lesson applies well beyond Pillar Two: A company’s name describes what someone intended it to be. Its legal rights and actual activities determine what it is.

Fees Can Sometimes Behave More Like Interest Than Service Charges

One of our September technical research projects examined the dividing line between commercial fees and interest or interest-like returns. This has practical relevance to financing arrangements, raising fees, arrangement fees, standby charges and other amounts associated with debt.

The label used in an agreement is not conclusive. A genuine fee normally compensates a party for a service, activity, commitment, risk assumption or identifiable work performed. The closer a charge is economically linked to: the amount of debt; the duration for which the money is outstanding; the passage of time; or the lender’s return for providing capital, the greater the need to examine whether its tax character may differ from its contractual label.

For CFOs, this means financing costs should not simply be entered into the general ledger according to the description appearing on an invoice. The agreement, economic purpose, calculation mechanism, IFRS treatment and tax character should be reconciled. A fee does not become interest merely because it accompanies a loan. But calling part of the lender’s economic return a fee does not necessarily prevent it from being analysed as interest.

VAT: Evidence Is Becoming Part Of The Architecture

VAT featured prominently in both our advisory and article work during September. One strand involved the recovery of VAT where the underlying statutory requirements had been satisfied but the refund or verification process required escalation and a properly constructed evidence pack. The lesson was that an escalation mechanism is not a substitute for proving the underlying entitlement.

The second strand is more structural. SARS’s VAT Modernisation programme envisages e-Invoicing, e-Reporting, structured transactional data and progressively more near-real-time visibility over VAT transactions. SARS has invited comments on the consultation paper by 16 October 2026.

This changes the governance question for businesses. VAT errors that previously became visible when someone prepared the VAT201 may increasingly be embedded in the source system before the return exists. That shifts responsibility towards ERP configuration, master data, tax codes, invoice design and transaction-level controls. The future VAT control environment therefore belongs as much to the CFO and systems team as it does to the tax practitioner.

SARS Correspondence: The First Response May Become The Dispute File

A further recurring lesson from the month’s compliance and dispute work concerns SARS information requests. The temptation is to treat an initial verification request as an administrative exercise: collect some invoices, prepare an explanation and submit it.

That can be risky. The first response may subsequently become part of the evidentiary record in an audit, additional assessment, objection or appeal. Before making a material submission, taxpayers should therefore reconcile the proposed explanation.

An explanation that solves today’s query but contradicts yesterday’s documentation can create tomorrow’s dispute.

What Should Boards, Business Owners And Trustees Do Now?

September’s work suggests seven immediate priorities.

• Reconcile trust distributions before filing: IT3(t), trustee resolutions, financial statements, loan accounts and beneficiary tax treatment should tell the same story.
• Do not restructure valuable shares without valuation: Establish the value and rights being surrendered and the value and rights being received.
• Separate legacy value from future growth: Where commercially appropriate, future expansion can sometimes proceed through a clean structure while historic assets are analysed separately.
• Model estate planning economically, not merely legally: Compare CGT, donations tax, section 7C, estate duty, liquidity and foreign-beneficiary consequences before moving assets.
• Make offshore substance functional: Employees, expenditure, contracts, control and management should sit where the commercial activity actually occurs.
• Review financing charges according to substance: Do not assume every amount described as a fee will necessarily receive fee treatment for tax or accounting purposes.
• Treat evidence as part of transaction design: A defensible position is considerably stronger when the evidence is created contemporaneously rather than reconstructed after SARS raises a question.

Fyncor Closing Insight

A pattern is becoming increasingly clear. Tax administration is moving closer to the underlying transaction.

SARS is obtaining more third-party information. Trust data is being pre-populated across returns. VAT is moving towards structured transactional reporting. Cross-border tax systems are becoming more sophisticated. International structures are increasingly judged against real functions, people and governance.

That environment does not eliminate legitimate tax planning. It makes implementation discipline more valuable. The strongest structures are therefore rarely those with the cleverest diagram. They are those where the commercial purpose, legal rights, tax position, accounting records, governance decisions and documentary evidence all lead to the same conclusion.

That is where planning becomes defensible and that is where good structuring preserves value.

Author(s)

Willem J Oberholzer

CA(SA), MCom Tax

Willem Oberholzer is a strategic leader in tax, financial management and executive governance, with more than 30 years’ experience across top-tier professional services and industry. Willem previously served as the CEO of Probity Advisory. Willem combines deep technical expertise with a proven track record of turning around businesses, expanding client footprints, and delivering shareholder value. He holds a Bachelor of Commerce in Accounting Honours Degree and Masters in Tax from the University of Pretoria. Willem is a qualified Chartered Accountant (SA).