“A Trust is a ‘person’ for tax purposes and is therefore a taxpayer in its own right.” (SARS)

With Tax Season 2024 for trusts opening on 16 September, there’s no better time to draw trustees’ attention to SARS’ continued emphasis that all trusts must register for income tax purposes, including dormant trusts. Once registered, trusts are obligated to submit income tax returns that are aligned with other trust reporting requirements from SARS and substantiated by extensive supporting documents and information. 

Trustees are held responsible for non-registration of trusts for income tax, and they will not be able to evade enforcement actions by blaming third parties for failing to file returns. “But I didn’t know I was meant to,” is not a valid excuse.

Trust tax returns can be filed from 16 September 2024 (much later than the usual June/July opening) until 20 January 2025.  

Along with the new filing season dates, trusts also face several onerous compliance requirements – and some stiff potential penalties. 

Onerous requirements

•  SARS introduced changes to the Income Tax Return for Trusts (ITR12T) last year, with additional probing questions, and even more mandatory supporting documents.
• The range of mandatory and supporting documents that must be submitted with the ITR12T depends on the trust type, and may include:
  • All certificates and documents relating to income and deductions 
  • Trust Deed and Letters of Authority  
  • Resolutions/minutes of trustee meetings
  • Details of the ‘Main’ Trustee (the SARS registered representative)
  • Financial statements and/or administration accounts
  • Particulars of assets and liabilities
  • Confirmation of banking details
  • Proof of payment of any tax credits
  • Supporting schedules

• Detailed disclosure of the beneficial ownership, including the submission of identity documents of all beneficial owners. This information will be checked against the beneficial ownership register lodged with the Master of the High Court. Non-compliance could result in a trustee receiving a fine of up to R10 million, a prison sentence of up to 5 years – or both.
• To provide SARS with a clearer understanding of the assets, income and activities within trust structures, trust returns now feature additional questions such as any local or foreign amounts vested in the trust as a beneficiary of another trust.
•  Information reported on the trust tax return must also align with the IT3(t) reporting of prescribed information by trusts, now also mandated by SARS. It includes trust distributions and their beneficiaries, trust and beneficiary demographic information, trust financial flows, and amounts vested in a beneficiary, including net income, capital gains and capital amounts. The first IT3(t) certificates are due to be submitted at the end of September 2024 for the 2023/24 tax year, and then on an annual basis.
• Despite the above reporting deadline, SARS confirmed that trust beneficiary income tax returns will not be pre-populated with IT3(t) data for the 2024 year of assessment. This means trustees must also provide details of trust beneficiaries’ 2024 trust earnings timeously to the beneficiaries for inclusion in their personal income tax returns, for which the submission deadlines remain unchanged despite the change in the trust tax filing season.

We can help you survive Tax Season 2024!

Without professional assistance, surviving trust Tax Season 2024 would be a tough ask. The complexity of the processes and the new requirements exponentially increase the risk of errors. And that’s before you factor in the significant time required to manually upload the extensive list of supporting documents – especially in light of SARS’ increased efforts to improve tax compliance and the severe penalties for non-compliance. 

We offer a wide range of specialist services, including tax consulting and tax compliance. Should you need our advice or assistance, contact your contact Partner at MGI Bass Gordon. Send an email to info@bassgordon.co.za or call us on 021 405 8500. at MGI Bass Gordon.

Additional reading:

SARS’ Step by Step Guide to complete your Trust return via eFiling and the Comprehensive Guide to the Income Tax return for Trusts are helpful resources when assisting clients with trust returns.

The article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.