Surviving Trust Tax Season 2025 – And Beyond

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“Trustees remain accountable for all tax matters of a trust, regardless of the economic activity of the trust.” (SARS)

The official trust filing season for the 2025 year of assessment is now open for both provisional and non-provisional taxpayers – and SARS has issued stern warnings to trustees to fulfil their tax obligations.

Who must file trust tax returns?

 A trust is included under the definition of a “person” in terms of the ITA (Income Tax Act no.58 of 1962) and is therefore regarded as a taxpayer.

All South African trusts, including resident and non-resident trusts, that are registered for income tax, must file a tax return annually, even if the trust is not economically active.

A trustee is the representative taxpayer of a trust. Trustees or representatives must register the trust for income tax and file the required tax returns annually. Alternatively, a registered tax practitioner can be appointed as the representative taxpayer.

What must be done?

 Taking into account recent changes to the legislation, trustees must submit their returns for the 2025 year of assessment and file the mandatory supporting documents listed further below.

Recent legislative changes

  • The “flow-through” principle is now limited to resident beneficiaries, so all amounts vested to non-resident beneficiaries are taxable in the hands of the trust. This also affects the submission requirements for provisional tax (IRP6).
  • Foreign tax credits for taxes paid on income or capital gains earned in a foreign jurisdiction can now be used to prevent double taxation.
  • From the 2025 tax year onwards, unused foreign tax credits will be carried forward automatically to the subsequent years of assessment, up to a maximum of six years.
  • The Section 12H Learnership Agreement is extended to 31 March 2027.
  • The definition of a trust is updated to include collective investment scheme portfolios.
  • SARS has issued new rules on how losses relating to distributions are limited under section 25B.

Return submissions

The final deadline for the submission of provisional and non-provisional Trust Income Tax Returns (ITR12Ts) is 19 January 2026.

Mandatory supporting documents

Required Documents Details
Trust instrument Latest deed or will
Certain transactions and financial flows Income sources and distribution of income; proof of any tax credits
Financial information Financial Statements/Annual Administration Account
Parties connected to a trust Beneficial-ownership document, including detail per entity listed
Other documents Letters of Authority and Minutes and Resolutions of trustee meetings
Foreign trust document (if applicable) Controlled Foreign Company (IT10)
Mining document (if applicable) Mining Schedule A and B

Source: SARS

File on time!

Trustees and administrators should take note that all the return submissions and supporting documents are due by 19 January 2026 – just days into the new year.

Submitting within the deadlines is necessary to comply with SARS regulations. Late submissions can lead to administrative penalties, interest charges, and additional steps.

What else must be done?

Because a trust is also a provisional taxpayer, trustees should be aware that a trust is further required to submit provisional tax returns (IRP6) twice a year in August and February.

In addition, trustees are also required to submit an IT3(t) third-party data return that provides details of amounts vested to beneficiaries.

Finally, all income derived from a trust must be declared by any resident beneficiaries of trusts in their own income tax returns.

Looking ahead: Key tax dates for trusts

  • 19 January 2026: Final deadline for provisional and non-provisional trust tax return (ITR12T) submissions.
  • 28 February 2026: Second provisional tax payment for the 2026 assessment year.
  • 31 August 2026: First provisional tax payment for the 2027 assessment year.
  • September 2026 (date TBC): Opening date for Income Tax Returns for Trusts (ITR12T) submissions for 2026.
  • 30 September 2026: Deadline for IT3(t) return submissions for trusts which declare amounts vested to beneficiaries’ income.
  • 30 September 2026: Top-up provisional tax payment for the 2027 assessment year.

Consequences of non-compliance

SARS takes a zero-tolerance approach to taxpayers who do not register for the applicable tax, file tax returns, declare income accurately, or pay their tax debt.

Non-compliance with these obligations is a criminal offence and will attract penalties and interest.

 

 

How Your Payment Terms Could be Damaging Your Business

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“Beware of little expenses; a small leak will sink a great ship.” (Benjamin Franklin)

Extending 30-, 60- or 90-day payment terms may seem like a simple trick to help your sales teams convert sales, smooth negotiations and boost customer service. What you may not recognise, though, is that those terms are not neutral commercial niceties – they are a form of credit.

When your business supplies goods or services today and accepts payment weeks or months later, it has effectively provided an unsecured loan to the buyer. That “invisible loan” has measurable costs: higher working-capital needs, lost interest income, distorted pricing decisions and elevated credit risk.

When you sell on extended terms, “accounts receivable” grows and cash on the balance sheet shrinks until the buyer pays. That increases days-sales-outstanding (DSO) and raises the working-capital requirement. If you borrow to cover the gap (common for seasonal businesses or those with tight margins) the interest paid on that borrowing is a direct cost of the terms you offered.

Even when you don’t borrow, the opportunity cost remains: cash not received cannot be used to reduce debt, invest in higher-return projects, or fund inventory when demand spikes. Over time the cumulative burden of routinely extended terms reduces agility and margins.

Unfortunately, many clients demand extended payment terms, and your competition may be prepared to accede to their wishes. So how do you ensure you keep the business without going out of business yourself?

1. Price the finance

Treat longer payment terms as a priced service. Build a transparent financing fee into orders that use 60- or 90-day terms, or publish two price lists: a net price for immediate payment and a financed price for deferred settlement. Customers accept explicit fees more readily than hidden margin increases, and your finance team can model return on capital precisely.

2. Offer structured early-payment incentives

Instead of unconditional long payment terms, offer predictable early-payment discounts or dynamic discounting tied to actual payment date. A 0.5–1.0% discount for payment within 7–10 days often costs less than the buyer’s short-term borrowing and converts receivables into near-cash for you.

3. Underwrite and limit credit formally

Move from ad-hoc allowances to formal credit applications and limits. Require a minimum credit assessment for extended terms, set credit lines tied to payment performance, and review limits at set intervals. For new or higher-risk customers, insist on shorter terms or staged delivery until a track record is established.

4. Design payment terms as part of commercial deals

Make terms a negotiation item linked to value. Trade extended terms for commitments: volume guarantees, longer contract terms, staged milestones, or partial upfront payment. Where applicable, split deals into an upfront deposit and a deferred balance tied to delivery or performance to reduce unsecured exposure.

5. Use technology and supply-chain finance options

Make payment easier with accurate, timely electronic invoicing, one-click payment links, and multiple payment methods. For larger B2B (business-to-business) accounts, consider invoice finance or supply-chain finance platforms. They enable buyers to settle invoices early and suppliers to access cash immediately, typically with transparent and lower financing costs than traditional receivables.

6. Make the invisible visible

 

It’s essential to stop treating DSO as a passive metric and make extended terms a line item in cash-flow forecasting. Your accountant (that’s us!) can help you report the cost of terms monthly: financing cost, incremental bad-debt risk, and the foregone investment return on delayed cash. We can also supply a short finance note quantifying the cost and proposed mitigation (discount, guarantee, deposit).

The bottom line

Payment terms are a commercial tool and a financial instrument. When finance and sales treat them differently, an invisible loan quietly accumulates. By following the steps outlined in this article you can make the loan visible and manageable. That shift preserves customer flexibility while protecting cash, margins and your company’s capacity to invest.

 

 

SARS Intensifies Trust Scrutiny—Are Your Trustees Prepared?

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The South African Revenue Service (SARS) has fundamentally changed the compliance landscape for all trusts. The latest revisions to the ITR12T (Trust Income Tax Return) and related legislation signal that SARS is moving toward full transparency, demanding granular detail on trust structures, distributions, and beneficiaries.

Trustees can no longer afford a passive approach; non-compliance is being flagged faster than ever, leading to immediate audits and severe penalties.

  1. New Compliance Cornerstone: The IT3(t) Data Mandate

The IT3(t) (Third-Party Data Return for Trusts) is now the most critical piece of the trust compliance puzzle, moving from an administrative task to a mandatory compliance check integrated directly into the tax return.

  • ITR12T Integration: The Trust Income Tax Return (ITR12T) now includes a mandatory confirmation question: “Did the Trust submit an IT3(t) return?” Failure to confirm submission will halt the filing process and trigger a non-compliance flag.
  • Automated Cross-Validation: SARS uses the IT3(t) data—which reports all amounts vested in beneficiaries (income, capital gains, and capital)—to directly pre-populate beneficiaries’ individual tax returns.
  • The Mismatch Risk: Any discrepancy between the amounts reported by the trust on the IT3(t) and the amounts declared by the beneficiary will be instantly visible to SARS’ automated systems, virtually guaranteeing an audit or investigation.
  1. Full Transparency: The Beneficial Ownership Disclosure

In line with international Financial Action Task Force (FATF) requirements, SARS is aggressively enforcing beneficial ownership (BO) disclosure to combat illicit financial flows.

  • Mandatory Detail: Trustees must provide extensive personal details, including the South African ID number, for every natural person who qualifies as a Beneficial Owner.
  • Broad Definition: A BO includes the Founder/Settlor, all Trustees, and all Identifiable Beneficiaries (even those who have not yet received a benefit).
  • Supporting Documents Required: The ITR12T mandates the upload of documents (such as an organogram or spreadsheet) that clearly depict the BO structure and control hierarchy.
  • Trustee Liability: Non-disclosure of BO information to both SARS and the Master of the High Court can lead to significant financial penalties and potential criminal sanctions for the trustees personally.
  1. Legislative Updates Restricting Tax Planning

Recent legislative changes have further tightened the net, targeting structures that previously offered tax efficiencies.

  1. Restriction on Flow-Through for Non-Residents

The long-standing flow-through principle, where income distributed to a beneficiary retains its nature, is now limited to South African resident beneficiaries only.

  • Impact: Income and capital gains vested in non-resident beneficiaries are now taxed within the trust itself at the highest flat rates (45% for income; 36% effective rate for capital gains).
  • Compliance Need: Trusts with non-resident beneficiaries must ensure they meet all provisional tax obligations and re-evaluate their distribution strategies.
  1. Attribution Rules and Minor Beneficiaries

The Donor Attribution Rules (Section 7 and Paragraph 69) remain a high-risk area.

  • Risk: Income or capital gains stemming from assets donated by a parent to a trust that are vested in their minor child are attributed back to the parent and taxed at the parent’s marginal rate.
  • The Cross-Check: The integration of the IT3(t) makes it simple for SARS to cross-check distributions to minors against the parent’s tax return, instantly highlighting any failures to apply these complex attribution calculations.

Immediate Action for Trustees

The time for a reactive approach is over. Trustees must proactively ensure their trust administration is watertight to avoid triggering a SARS audit.

  1. Verify Beneficial Ownership: Ensure all BO details are current, accurate, and fully documented before filing.
  2. Align IT3(t) and ITR12T: Confirm that the vesting decisions and amounts reported on the IT3(t) are 100% consistent with the ITR12T and the beneficiaries’ expected tax declarations.

Review Distribution Strategy: If the trust has non-resident beneficiaries or distributes to minors, urgently review the strategy to ensure compliance with the new limitations and the strict attribution rules.