Trust Legal Changes

2026 Trust Income Tax Season

Trust Income Tax — 2026 Tax Season Updates: Information for Trustees and Representatives

SARS is modernising its services to make it easier for taxpayers to meet their obligations and to support voluntary compliance. As part of this commitment, SARS will update the trust income-tax return process for the 2026 tax season.               

Key Dates for Trust Tax Matters

• 31 August 2026: first provisional tax payment for the 2027 assessment year.
• 19 September 2026: opening date for Income Tax Return for Trusts (ITR12T) submissions.
• 30 September 2026: deadline for IT3(t) return submissions.
• 30 September 2026: top-up provisional-tax payment for the 2026 assessment year.
• 22 January 2027: final deadline for provisional and non-provisional trust tax return (ITR12T) submissions.
• 28 February 2027: second provisional tax payment for the 2027 assessment year.

The appointed representative taxpayer (trustee or tax practitioner) must submit the ITR12T annually within the prescribed trust-return filing period through SARS eFiling.

Below is an overview of important updates for the 2026 Trust Income Tax Season.

Legislative Changes

Section 1 — Definition of “Representative Taxpayer”

The amendment clarifies that a trustee or administrator of an insolvent estate, acting in a representative capacity, is responsible for income received by or accrued to the insolvent estate before sequestration.

Section 7(5) — When Income Is Deemed to Have Accrued or Been Received

An additional trigger is introduced for ending the deemed accrual of income to a donor, namely a change in tax residence. Previously, income continued to be deemed to the donor until a condition or event occurred, or until the donor’s death. Under the change, if the donor ceases to be a South African tax resident, the income will no longer be deemed to have accrued to that donor, even if the relevant condition has not occurred or the donor is still alive. The change applies from 1 March 2026 for years of assessment starting on or after that date.

Section 18(2B) — Deduction of Donations to Certain Organisations

The current audit-certificate requirement for public benefit organisations (PBOs) that issue section 18A receipts is replaced with a certificate containing information prescribed by the Commissioner through a public notice. The certificate must confirm, to the reasonable satisfaction of a registered tax practitioner, that all donations received or accrued during the year of assessment in respect of which section 18A receipts were issued were used for approved public-benefit activities contemplated in section 18A(2A). The Commissioner will prescribe the required information by public notice. The effective date is the date of promulgation.

Section 18(2C) — Deduction of Donations to Certain Organisations

Section 18(2C) requires PBOs to submit a certificate to the Commissioner containing information prescribed by public notice and confirming, to the reasonable satisfaction of the relevant officer or authority, that all donations received or accrued in the financial year, in respect of which receipts were issued, were used exclusively for approved public-benefit activities contemplated in section 18A. The effective date is the date of promulgation.

Section 12L — Deduction in Respect of Energy Efficiency Savings

The sunset date for section 12L has been extended for any year of assessment ending before 1 January 2031. The effective date is 1 January 2026.

Section 13quat — Urban Development Zones (UDZ)

The sunset date for section 13quat has been extended from 31 March 2025 until 2030. The effective date is deemed to have come into operation on 1 April 2025 and applies in respect of any building or part thereof, or any improvement, that is brought into use on or after that date.

Section 25B — Taxation of Trusts and Beneficiaries of Trusts

Section 25B is amended to clarify its interaction with the anti-avoidance provisions in section 7(2) to (8). Income vested in resident beneficiaries may be taxed in the hands of those beneficiaries, while income vested in non-resident beneficiaries will be taxed in the trust. Where section 7 applies, the relevant income may continue to be taxed in the hands of the donor. The amendment applies from 1 March 2026 in respect of years of assessment starting on or after that date.

Paragraph 82A of the Eighth Schedule — Capital Distributions by Collective Investment Schemes

Paragraph 82A clarifies that capital distributions by Collective Investment Schemes, where the amount is not included in income or gross income, must be treated as capital gains in the hands of investors. Investors must include these amounts in their capital-gains tax calculation, with no base-cost offset allowed. The amendment aims to ensure that such capital distributions are taxed appropriately when received.

Paragraph 61 of the Eighth Schedule

Paragraph 61 has been amended by inserting the phrase “Subject to paragraph 82A” at the beginning of subparagraph (1). This links Paragraph 61 to the new Paragraph 82A and clarifies that certain capital distributions by Collective Investment Schemes may trigger capital-gains-tax consequences for investors, even when there has been no disposal of their units.

Section 11(4) — Legal Proceedings Involving the Commissioner

Section 11(4) now provides that, unless the court otherwise directs, no legal proceedings may be instituted in the High Court against the Commissioner unless the applicant has given the Commissioner at least ten (10) business days’ written notice, in the prescribed form, of the applicant’s intention to institute the legal proceedings. The amendment clarifies the wording of the notice requirement. The effective date is the date of promulgation.

Section 164(2)/(3) — Payment of Tax Pending Objection or Appeal

The amendment broadens the application of section 164 by allowing taxpayers to request a suspension of payment when they intend to dispute, or are disputing, liability for tax, including tax debt arising from estimated assessments. Such a request may be made before a formal objection or appeal is lodged, provided that the required return or relevant material has been submitted. The effective date is the date of promulgation.

Section 222 — Understatement Penalty

Section 222(1) is proposed to be amended by removing the exemption for a “bona fide inadvertent error”. This means that taxpayers may no longer rely on an honest mistake as a general defence against understatement penalties. Understatement penalties may therefore apply more broadly where tax has been understated, subject to the relevant provisions of the Tax Administration Act.

Return Enhancements and Taxpayer Experience Improvements

• Automated SMS reminders will be introduced to remind trust taxpayers to submit income tax returns and pay assessed amounts on time.
• A taxpayer experience survey will be included as part of the ITR12T submission process to allow taxpayers to provide feedback directly after submission.
• Trust taxpayers will be able to amend an incorrect Master’s reference number directly on the ITR12T, subject to validation against SARS registration information. The amendment will still allow changes only within the current field limitations. A future enhancement will enable the full reference number, as reflected on the Letters of Authority, to be captured, and this will be communicated once the field length has been increased.
• Continuous save functionality will be introduced on the ITR12T to help prevent the loss of captured information during periods of inactivity.

Additional Return and Compliance Enhancements

• Income, vested amounts, and certain expense information will be pre-populated from IT3(t) data, where available, to reduce duplication and improve accuracy.
• Beneficiary schedules on the ITR12T will be pre-populated using IT3(t) information, where available.
• New containers will be introduced to determine and analyse the impact of section 25B (4)–(6).
• Filing rules will be aligned with the annual Government Notice to correctly identify trusts legally required to submit returns.
• Beneficial-ownership founder questions will be enhanced to cater for cases where the founder is a legal entity that no longer exists, in addition to deceased natural persons.
• Collective Investment Schemes will have the option to submit beneficial-ownership information; however, the completion of this information will not be mandatory.
• Tax practitioner contact details will now be mandatory to facilitate more effective communication and improve administrative efficiency.
• The special trust-qualification questions will be improved to confirm if a trust continues to meet the qualifying criteria during the year of assessment. Trusts that no longer meet these criteria will be required to update their trust type before proceeding with the submission of the return. This correction can currently be made only at a SARS branch, because supporting documentation must be submitted and the information verified. Future enhancements will enable taxpayers to update the trust type on

Further Information

• After submitting the ITR12T, please complete the taxpayer experience survey when prompted. Your feedback will help SARS improve the trust return submission process.
• An updated version of the Comprehensive Guide to the Income Tax Return for Trusts will be made available on this SARS website for the 2026 Trust Income Tax Season.
• Register, submit, and pay the assessed amounts on time as required by legislation.

We extend our sincere appreciation to all stakeholders for their commitment to tax compliance and for contributing to a better South Africa.

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.