Family trusts are common in South Africa for estate planning and asset protection. But a trust is a separate taxpayer, and its trustees are responsible for making sure it complies with SARS.
Every registered trust must file
A trust registered for income tax must submit an ITR12T return each year, even if it earned little or no income. The return covers the trust's income, capital gains, distributions to beneficiaries and details of its assets and liabilities.
How trusts are taxed
- Income kept in a trust is generally taxed at a flat rate of 45%, the highest individual rate. Special trusts are taxed differently.
- Income and capital gains distributed to beneficiaries in the same year can be taxed in the beneficiaries' hands instead, which may be more tax efficient.
- Loans to trusts by connected persons at low or no interest can trigger donations tax under the anti-avoidance rules.
Beneficial ownership and records
Trusts must also keep a register of their beneficial owners and lodge it with the Master of the High Court, and keep it updated. Trustees should keep minutes of decisions, especially distributions, and proper financial statements.
Common problems we see
- Returns not submitted for years because the trust is "dormant".
- Distributions made without trustee resolutions.
- Beneficiary information missing or inconsistent with what was reported to SARS.
This article is general information based on the law and SARS guidance as at 14 July 2026. It is not tax or legal advice for your specific situation. Please contact us before acting on it.
