The South African Revenue Service (“SARS”) has had trusts under a microscope since April 2023 when the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022 came into full effect. SARS has issued stern warnings to trustees to ensure the accurate and honest submission of trust tax returns and made it abundantly clear that trustees can no longer shift the responsibility of managing a trust’s tax affairs entirely to tax practitioners. Trustees must understand trust-specific tax rules to avoid penalties and legal consequences. 

SARS has introduced a dedicated filing season for trusts, with the 2024 tax year spanning from 16 September 2024 to 20 January 2025. As part of SARS’ additional requirements for tax returns, trustees now have to ensure that they submit three resolutions during different months to SARS for trust tax submissions. 

• First resolution: had to accompany trust tax returns (ITR12T) and was due 20 January 2025. The ITR12T applies to trusts with more than 10 beneficiaries at any time during the year of assessment. 
• Second resolution for trust tax returns was due at the end of February 2025. This resolution has to indicate the estimated vested percentages that have been allocated to a specific beneficiary. 
• The third resolution for trust tax declarations, IT3(t), is due at the end of September 2025. The goal of this resolution is for the representative taxpayer of the trust to supply specific information about the amounts vested in the beneficiaries for a particular year of assessment.

It is important to note that these resolutions cannot be backdated as SARS is in the process of implementing Artificial Intelligence to detect backdated resolutions and determine the actual date of preparation of a resolution. This measure reinforces the need for real-time trust administration and encourages trustees to manage their trust as a separate entity on a continuous basis. 

These resolutions are another mechanism employed by SARS to ensure that all trust income and distributions are accurately accounted for, to identify any inconsistencies or omissions in trust reporting and to ultimately strengthen SARS’ revenue collections.  

In addition to requirements of the resolutions for trust tax submissions, trusts are now required to provide comprehensive supporting documents when submitting their tax returns, including trust instruments, annual financial statements, resolutions and minutes of trustee meetings and beneficial ownership information. 

Starting from April 2025, SARS is expected to start imposing administrative penalties on trusts that fail to submit income tax returns or IT3(t) third-party data returns. These penalties can be applied retrospectively, emphasising the urgency for trusts to align their systems and information with SARS’ requirements. It is also important to note that failure by trustees to disclose the beneficial ownership information of the trust to both the Master of the High Court and SARS may also result in substantial penalties and/or sanctions for the trustees. 

Trustees must remember to manage trust tax compliance proactively, ensuring timely and accurate submissions to both the Master of the High Court and SARS. The additional requirements implemented by SARS have enhanced regulation and emphasised the importance of transparency and accountability making it essential for trustees to familiarise themselves with these requirements. Trustees can avoid penalties and legal repercussions by taking the necessary steps to ensure they comply with the requirements set out by SARS. 

Should you require legal advice on trusts and these new requirements, reach out to our Trust Office Team for assistance.


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