Trust compliance is becoming increasingly important, and trustees need to make sure that all of the trust’s tax and administrative affairs are up to date.
The South African Revenue Service (SARS) has increased its focus on trust reporting and compliance. Trustees who have outstanding returns or incorrect information may face penalties, even where a trust has little or no activity.
For the 2026 trust tax filing cycle, it is worth reviewing the trust’s SARS status now rather than waiting until the filing deadline.
Do Trusts Have to Submit an Annual Tax Return?
Yes. Trusts generally have an annual income tax filing obligation, even if the trust is not actively trading or generating significant income.
The ITR12T is the income tax return used by trusts to report their income and other relevant information to SARS.
This means that simply having a dormant or passive trust does not necessarily remove the requirement to submit an annual return.
SARS has also confirmed that administrative non-compliance penalties can apply when trust income tax returns are outstanding. These penalties can recur monthly until the outstanding compliance issue is resolved.
This applies to outstanding trust returns from the 2024 year of assessment onwards.
What Information Should Trustees Check?
Trustees should not only check whether the latest tax return has been submitted. The information held by SARS should also be reviewed to make sure it is accurate.
This includes details such as the trust’s registered information and RAV details.
Incorrect or outdated information can create problems when submitting returns or dealing with SARS, particularly if the trust’s circumstances have changed.
It is therefore a good idea to review the trust’s SARS information as part of its annual compliance process.
Is Trust Income Being Treated Correctly?
Submitting an ITR12T is only one part of trust tax compliance.
Trustees also need to make sure that income and distributions have been treated correctly for tax purposes. Trust taxation can be complicated because the tax treatment may depend on the type of income, what happened to that income during the year and whether amounts were vested in beneficiaries.
For example, trustees may need to distinguish between:
- Income retained by the trust
- Income validly vested in beneficiaries
- Capital receipts and taxable income
- Rental income
- Interest income
- Dividends and other investment income
- Amounts subject to attribution rules
- Distributions made to beneficiaries
The accounting records, trustee resolutions and beneficiary information should support the treatment reflected in the trust’s tax return.
This is particularly important where the trust has distributed income or assets to beneficiaries during the year.
Important Trust Tax Dates for 2026 and 2027
Trustees should be aware of the key dates for the current trust filing cycle.
19 September 2026: ITR12T filing opens.
30 September 2026: IT3(t) submissions are due.
22 January 2027: Final deadline for submitting the ITR12T.
28 February 2027: Second provisional tax payment for the 2027 year of assessment, where applicable.
Missing these deadlines can result in unnecessary compliance problems and, in certain circumstances, penalties.
What Should Trustees Do Now?
If you are a trustee, it is worth checking the trust’s tax affairs before the filing deadline rather than discovering a problem when SARS issues a penalty or query.
A basic compliance review should include checking:
- Whether all outstanding ITR12T returns have been submitted.
- Whether SARS has raised any administrative non-compliance penalties.
- Whether the trust’s RAV and other SARS information is correct.
- Whether IT3(t) reporting has been completed correctly.
- Whether beneficiary distributions have been properly recorded.
- Whether trustee resolutions support the distributions and tax treatment.
- Whether all trust income has been correctly accounted for.
- Whether provisional tax obligations have been considered.
If previous returns are outstanding, it is particularly important to address them as soon as possible because penalties may continue to accrue while the trust remains non-compliant.
Need Help With Trust Tax Compliance?
Trust taxation is not always straightforward. The correct treatment can depend on the trust deed, trustee resolutions, beneficiaries, the nature of the income and how amounts were distributed or retained.
Tax Shop Outeniqua assists trustees with trust compliance and tax matters, including outstanding ITR12T returns, compliance reviews, penalty reviews, IT3(t) submissions, RAV updates, provisional tax, beneficiary distributions and the correct treatment of trust income.
Getting your trust’s tax affairs in order now can help prevent unnecessary penalties and complications later.
General information only. The tax treatment of a trust depends on factors including its trust deed, resolutions, beneficiaries, residency and the nature of its income. Professional advice should be obtained based on the specific circumstances of the trust.
