A trust is a legal arrangement, governed in South Africa by the Trust Property Control Act 57 of 1988, in which a founder transfers assets to trustees who hold them for beneficiaries. South Africans use trusts for estate planning, asset protection and continuity. An ordinary trust is taxed at a flat 45% (effective CGT 36%), so the planning relies on the conduit principle and, often, a trust-and-company structure. This hub explains it all — in plain language, with the actual words of the law beside every point.
What a trust is
A trust separates legal ownership (held by the trustees) from beneficial enjoyment (the beneficiaries). It is not a separate legal person like a company; the trustees, acting in their representative capacity, own the trust property and contract on the trust’s behalf. Every inter vivos trust must be registered with the Master of the High Court, who issues Letters of Authority before the trustees may lawfully act.
The three parties to a South African trust
Governed by the Trust Property Control Act 57 of 1988. The founder can also serve as a trustee, but not as the sole trustee or sole beneficiary.
Start with the foundations — the types of trust, the three parties, how to register one, and whether a trust is right for you.
Two paths: a family trust, or a trust-and-company structure
Most people start with an ordinary family trust — to hold the family home, protect assets and provide for children across generations. A second, more advanced path is the trust-and-company structure: a company (a Newco) owns the asset, and a discretionary trust owns the shares in that company. That structure is built with the corporate roll-over rules — chiefly the section 42 asset-for-share transaction — and is funded by a donation or a loan (which brings in section 7C). Our restructuring guide walks through it end-to-end.
How trusts are taxed (the headline)
Tax is the heart of trust planning — and the most misunderstood part. An ordinary trust pays income tax at a flat 45% and capital gains tax at an effective 36% (an 80% inclusion rate at 45%). That is not 18% — 18% is the top rate for an individual. The planning therefore relies on the conduit principle (vesting income or gains in beneficiaries so they are taxed at lower rates) — subject to the attribution rules that can push the tax back to the founder.
| Tax | Applies to | Rate (2026) |
|---|---|---|
| Income tax — trust | Income retained in an ordinary trust | 45% (flat) |
| Income tax — company | Newco's rental / trading profit | 27% |
| Income tax — individual | Income vested in a resident beneficiary | Up to 45% (sliding scale) |
| CGT — trust | Gain retained in an ordinary trust (80% inclusion) | 36% effective |
| CGT — company | Gain in a company (80% inclusion) | 21.6% effective |
| CGT — individual / special trust | Gain in a person / special trust (40% inclusion) | 18% effective |
| Dividends tax | Company pays a dividend upward | 20% |
| Donations tax | Gifts / s 7C deemed donations (25% over R30m cumulative) | 20% |
| Estate duty | Dutiable estate on death (25% over R30m) | 20% |
| Securities transfer tax | Transfer of shares (e.g. Newco shares to the trust) | 0.25% |
| VAT | Standard-rated supplies (e.g. commercial property by a vendor) | 15% |
| Official rate of interest | s 7C deemed donation on low/no-interest loans (repo 7% + 1%) | 8% (from 1 Jun 2026) |
| Transfer duty | Acquiring property — sliding scale | 0% to R1.21m … 13% above R13.31m |
Last reviewed: 3 June 2026. Rates are South African and time-sensitive; 2026 Budget measures (donations-tax exemption increases, resident-spouse limitation) are subject to Parliament's legislative process. A special trust is taxed on the individual sliding scale (CGT 18%), not the flat 45% / 36% that applies to an ordinary trust. Confirm every figure against the current SARS material before acting.
Read the full explanation on how trusts are taxed, or the one-page 2026 rates reference.
A running example: the Nkosi family
Throughout the restructuring guide we follow one family. Thabo Nkosi owns a rental property worth about R6 million that he bought for R2 million (a built-in R4 million gain), with a R1 million bond. He wants to keep the property safe from business risk, stop its growth inflating his estate, and provide for his wife and two young children. His adviser proposes the classic structure: form a Newco to hold the property, and a discretionary family trust to hold Newco’s shares. We follow that decision — and every tax that shapes it — through the restructuring guide.
This hub is general information, not legal or tax advice for your specific matter. Every figure is current to 3 June 2026 and should be confirmed against the latest legislation and SARS material before acting.