On 4th June 2024, The South African Revenue Service (SARS) announced the 2024 income tax return filing dates for individual and trust taxpayers. This announcement brought a noteworthy change to the filing season for trust taxpayers. 

Historically, the filing season for trust taxpayers aligned with that of individual taxpayers. However, trusts now have their own dedicated filing season, starting 16 September 2024 to 20 January 2025.

With 2024 being the first year that trust taxpayers are tasked with submitting third party IT3(t) returns to SARS by 30 September 2024, this change of the filing season could potentially offer a silver lining for trust taxpayers, granting them additional time to prepare for their 2024 tax return filing along with the added compliance measures that come with the submission.

Trusts have encountered a wave of compliance changes in the recent year with SARS introducing enhanced compliance requirements to increase transparency and ensure that trusts are used for legitimate purposes. For settlors, trustees, donors, and beneficiaries, understanding these changes and ensuring compliance is essential.

New Compliance Requirements

The new compliance measures introduced by SARS are mainly driven from international pressure to ensure enhanced compliance of trusts, and various initiatives can be directly tied to South Africa's commitments and actions aimed at exiting the grey listing as well as to ensure that trust taxpayer compliance is enabled through technology. 

These measures have resulted in changes to the trust tax return and the extent of tax reporting required for trust taxpayers.

Key Changes to the Trust Tax Return

In 2023, significant amendments were made to the trust income tax return, with these changes expected to continue in the 2024 tax season. Trusts must now provide more detailed information in several key areas that include:

• Beneficial Ownership

One major change is the requirement for the detailed disclosure of the beneficial ownership of the trust. Trusts must now provide comprehensive information about individuals, including beneficiaries identified as beneficial owners. Accurate reporting of this information is crucial for compliance.

• Income and Activities

Trusts are now required to disclose detailed information about their income and activities. This includes comprehensive reporting on all income sources, the nature of the trust’s activities, and how these activities align with the trust’s objectives. This helps SARS verify that trusts are used appropriately and transparently.

• IT3(t) Reporting

In line with its modernisation efforts, SARS is expanding third-party data information requirements. Trusts must now declare distributions to beneficiaries annually through IT3(t) reporting.

• Compulsory Upload of Supporting Documents

Sufficient documentation is required to support the information disclosed in the trust income tax return. Especially since all trust taxpayers are now subject to a compulsory upload of supporting documents upon filing their tax return, trusts must maintain accurate and complete supporting documents to demonstrate compliance. This includes trust financial statements, resolutions, and any other relevant documentation verifying the trust’s financial activities.

Ensuring Compliance

To ensure your trust complies with the new SARS requirements, consider the following:

• Maintain Detailed Records: Ensure you have meticulous records of all resolutions passed and financial transactions during the tax year, ensuring that these supporting documents are readily available to submit to SARS as part of the tax return filing.
• Accurate Beneficial Ownership Disclosure: Double-check that all beneficial owners are correctly reported and match the beneficial ownership register that is lodged with the Master of the Hight Court.
• Comprehensive Reporting of Income and Activities: Ensure you can account for all income sources and activities, aligning them with the trust’s objectives.
• Accurate IT3(t) Form Submission: Report all amounts vested or distributed to trust beneficiaries accurately on the IT3(t) form to avoid penalties.
• Stay Informed: Regularly review updates from SARS and other regulatory bodies to stay up to date with the latest trust compliance requirements.

Conclusion

Ensuring compliance with the latest SARS requirements is essential for trusts.

By seeking professional advice, and staying informed about regulatory updates, you can confidently tackle these new compliance requirements. 

For more information and updates on the new compliance requirements for trusts, enquire with Tax Consulting SA. Your trust’s tax compliance with SARS is not merely a regulatory tick box to check; it is the foundation of transparency and ensures your trust can navigate the financial and compliance landscape with confidence and integrity.

Written by Sidney Fletcher, Senior Manager Trust and Deceased Estate Tax Compliance at Tax Consulting SA