2025 Trust Income Tax Season
Enhancements to Trust Beneficial Ownership information
SARS aims to record all beneficial owners of Trust taxpayers to comply with the Financial Action Task Force (FATF) requirements. SARS currently collects Beneficial Ownership information during the registration process (via SOQS or manual registration at a branch) or during the filing season submission of a tax return (ITR12T). In this regard, certain information must be submitted via eFiling. These documents may include, but are not necessarily limited to, the following:
- An organogram, illustrative, or schematic diagram depicting effective control of the Trust. Where the Beneficial Ownership is in the form of other legal arrangements or legal entities, this should be provided in a separate attachment;
- An Excel spreadsheet containing the above information; or
- Such other document(s), that will provide further detail on Beneficial Ownership in relation to the Trust.
When capturing the Beneficial Ownership information, it is mandatory for the current year’s return that at least one document be submitted that relates to Beneficial Ownership information. In the event that there are more than 20 beneficial owners, the taxpayer must upload a supporting document that reflects the additional beneficial owner(s).
Please note: A function is available on eFiling to upload the supporting schedules.
Legislative Changes
Definition of a Trust
The definition of a trust has been updated to include the underlined words below:
“trust” means any trust fund consisting of cash or other assets which are administered and controlled by a person acting in a fiduciary capacity, where such person is appointed under a deed of trust or by agreement or under the will of a deceased person, and includes a portfolio of a collective investment scheme and a portfolio of a hedge fund collective investment scheme.
Please note that this amendment does not affect the ITR12T.
Section 6quat
With effect from 1 March 2025, section 6quat of the Income Tax Act (the ITA) has been amended for taxpayers to fully use foreign tax credits for the taxes paid on capital gains in the foreign jurisdiction, to the same extent as taxes paid in South Africa on the same gains.
From the 2025 tax year, SARS will maintain any unused foreign tax credits to be carried forward automatically in the subsequent years of assessment, up to six years. In addition, section 6quat(1A) (a)(iii) clarifies the rebate for foreign taxes on income in respect of capital gains. To prevent double taxation on capital gains of residents due to the disposal of assets situated outside South Africa, section 6quat (1A)(a)(iii) of the Act provides for residents to claim a credit against South African tax for irrecoverable foreign taxes paid on these foreign-sourced capital gains.
Section 12H Learnership Agreement
The section 12H (of the ITA) Learnership Agreement termination date has been extended from 1 April 2024 to 31 March 2027.
Section 25B
Section 25B was amended to align it to paragraph 80 of the Eighth Schedule to the ITA by limiting the “flow-through” principle only to resident beneficiaries. This means that all amounts vested to non-resident beneficiaries are subject to tax in the hands of the trust.
Note: this amendment will also affect the submission requirements for provisional tax (IRP6).
Form Changes
ITR12T Farming and Partnership Farming Auto-Calculator
- Income and Expense Declaration: taxpayers can declare income and expenses from farming operations, with each field previously requiring manual input, including opening balances.
- Under-Declaration Challenge: SARS was previously unable to proactively identify potential under-declarations because information was captured manually.
- Auto-Calculation Amendment: the form now allows for automatic calculation of amounts, which will be stored for pre-population in future returns.
- Pre-Population Feature: the system will extract previous IT48 and IT48V assessed information (balances) and prepopulate this information in the current year return.
- Enhanced Reporting: improved tax reporting for trusts relating to local farming operations and local farming partnerships.
Wizard Question on ITA Section 25B(4)-(6) — Limitation of Losses
A new question is introduced in the wizard to ascertain if any amounts vested are subject to section 25B(4)-(6). This information will help SARS design future iterations of the return that may provide for these scenarios.
Flow-through of Capital Losses
The flow-through of capital losses is not permitted under paragraph 80 of the Eighth Schedule to the ITA. However, in a trust environment, there may be cases where this rule may not apply, e.g. in the case of a bewind or vesting trust. The ITR12T is amended to provide for such scenarios. Subsequently, a new wizard question is introduced for the trustees to declare if the trust is a bewind or vesting trust.
Type (b) Special Trusts (Only when a Trust Is Classified as Such)
A new question is introduced in the wizard that requires confirmation from the trustees that the youngest beneficiary has not yet reached the age of 18 on the last day of the year of assessment. Based on the answer to the wizard question, the trustee will either be redirected or allowed to continue with the completion of the form.
Beneficial Ownership
- Deceased founders: the form is amended to provide for scenarios where the founder is deceased. A tick-box is included for this purpose.
- Unnamed beneficial owners: the form is amended to provide for scenarios where the beneficial owners — usually beneficiaries — are unnamed or a class of beneficiaries. A free text box is included to provide for the details of these unnamed beneficiaries.
Trust Income Changes
- From the 2025 tax year, SARS will apply a 50% communal estate where income from a trust is declared, and the taxpayer is married in community of property.
Unused Balances such as Section 11F, Section 18A, Section 20
- SARS will print the note given below on the ITA34, in instances where unused balances are not automatically carried over to the subsequent year of assessment: SARS did not consider your carryover/brought forward amount(s) as the current return is under the verification review. SARS will initiate the amendment of the return to take the carryover/brought forward amount into account once the verification case is finalised.
2024 Trust Income Tax Season
Form and system changes introduced for the 2024 Trust Income Tax Season
From 16 September 2024, SARS changed some aspects of the Trust Income Tax Return. The changes include:
- Section 12BA of the Income Tax Act 58 of 1962: Enhanced Deduction for Certain Machinery, Plant, Implements, Utensils, and Articles Used in the Production of Renewable Energy:
- To encourage greater private investment in renewable energy, SARS has temporarily made the renewable-energy tax incentive available in section 12B of the Income Tax Act more attractive.
- Section 13quat of the Income Tax Act 58 of 1962: Urban Development Zone (UDZ)
- SARS extended the tax incentive for two years from 31 March 2023 to 31 March 2025.
- Section 7C of the Income Tax Act 58 of 1962: Loans, Advances, or Credit Granted to Trusts by a Connected Person
- The exclusion for the acquisition of a primary residence is clarified and includes funding of improvements to the primary residence. The limitations in paragraph 46 relating to the land on which the primary residence is situated apply.
- Section 246 of Tax Administration Act No. 28 of 2011: Public Officer
- A new question has been added to the form wizard to confirm that the person appointed as a trustee has not been disqualified.
- Section 18A of Income Tax Act 58 of 1962: Donations
- The questions about donations have been updated to allow the taxpayer to enter up to 20 approved organisations to which the Trust donates.
- Section 93 Reduced Assessment: Request for Reduced Assessment (RRA02)
- A new functionality has been introduced to manage requests for reduced assessments for Trusts under s93 of the Tax Administration Act (TAA). To request a reduced assessment, taxpayers should complete the Request for Reduced Assessment (RRA02) form. A case will then be created to assess if the taxpayer qualifies for a reduced assessment under s93(1)(d) or s93(1)(e).
- Beneficial Ownership
- The Beneficial Ownership section has been clarified to help taxpayers complete the information for unnamed beneficiaries.
- Other Enhancements to the Trust Return (ITR12T)
- Previously populated Beneficial Ownership information will be pre-populated from the Beneficial Ownership data provided in the 2023 year of assessment. The submitter must confirm that the information is correct, even if no amendments were made.
