Once-off setup costs
Setting up the trust itself is the cheap part. The core once-off costs are the attorney’s fee for drafting the trust deed, the Master of the High Court lodgement when the trust is registered and letters of authority are issued, and any notarisation of signatures or supporting documents. There is no setup tax simply for forming a trust — the taxes below only arise when you start putting value into it. For the full step-by-step, see how to register a trust.
The Master’s own charge is small and fixed: R250 per trust instrument, payable on lodgement for trusts registered from 1 January 2018, with proof of payment lodged with the deed (GN 1162, GG 41224, 3 November 2017). According to the Master’s trusts page, “There are no costs involved in amending an existing Trust.”
Because the deed-and-Master leg is predictable, we register trusts on a fixed fee — so you know the setup cost before you start, with no hourly surprises. See our fixed-fee trust registration in Pretoria.
Costs if you move assets into the trust
The expensive once-off items are not the trust itself — they are the taxes on transferring assets in. If property moves into the structure you face conveyancing fees and transfer duty; if you fund the trust by donating assets or cash you face donations tax. Donations tax is charged on the value of anything given away for nothing, and it is the donor who pays.
Do not forget the tax that is easiest to miss: capital gains tax in your own hands. Selling or donating an asset — or the shares in a property company — to the trust is a disposal at market value (paragraph 38 of the Eighth Schedule where the price is below market), so the built-in gain is taxed now even if the trust pays on loan account and no cash comes in. On the running Nkosi example that is a R4 million gain and roughly R711 000 of CGT before any donations tax or transfer duty. That figure uses the R50 000 annual exclusion SARS publishes (from clause 15 of the 2026 Draft Rates Bill; promulgated amendment not located) — on the enacted R40 000 it is R712 800. See funding: donations and loans.
Subject to the provisions of section 56, there shall be paid for the benefit of the National Revenue Fund a tax (in this Act referred to as donations tax) on the value of any property disposed of (whether directly or indirectly and whether in trust or not) under any donation by any resident (in this Part referred to as the donor).
The rate is 20%, rising to 25% on cumulative donations above R30 million:
The rate of the donations tax chargeable under section 54 in respect of the value of any property disposed of under a donation shall be— (a) (i) 20 per cent of that value if the aggregate of that value and the value of any other property disposed of under a taxable donation on or after 1 March 2018 until the date of that donation does not exceed R30 million; and (ii) 25 per cent of that value to the extent that that value is not taxed under subparagraph (i); …
Note — The R30 million cumulative threshold aggregates the value of all property disposed of under a taxable donation since 1 March 2018; everything above it is taxed at 25%.
Natural persons have an annual exemption. The Act and the SARS rates guide still record the old figures, but the current numbers are higher — watch the date:
Natural persons: Amount exempt — 01/03/2007 – 28/02/2026 : 100 000
Persons other than natural persons: Amount exempt – Casual gifts — 01/03/2002 – 28/02/2026 : 10 000
Note — The R100,000 / R10,000 figures applied up to 28 February 2026. SARS now publishes R150,000 (natural persons) and R20,000 (casual gifts by a non-natural person), from clause 9 of the 2026 Draft Rates Bill, deemed effective 1 March 2026; we have not located the promulgated amendment — see the note below.
The figure SARS currently publishes, proposed in the 2026 Budget for years of assessment beginning on 1 March 2026:
Donations tax is levied at a flat rate of 20% on the cumulative value of property donated since 1 March 2018, not exceeding R30 million; and at a rate of 25% on the cumulative value of property donated since 1 March 2018, exceeding R30 million. The first R150 000 of property donated during each tax year by a natural person is exempt from donations tax. In the case of a taxpayer who is not a natural person, the exempt donations are limited to casual gifts not exceeding R20 000 in total per tax year.
Note — The exemption increase sits in clause 9 of the 2026 Draft Rates Bill (25 February 2026); we have not located the promulgated amendment, so treat the figure as SARS-published rather than quoted statute and confirm the enacted section before relying on it. The 2026 Budget also announced limiting the spouse exemption to a resident spouse. That proposal is not in the Draft Rates Bill: it is clause 17 of the 2026 Draft Taxation Laws Amendment Bill (29 July 2026), deemed effective for donations made on or after 25 February 2026 — and it is still a draft.
This is why most founders lend value to the trust rather than donating it: a loan attracts no donations tax when it is made. The catch is that a low-interest or interest-free loan then carries its own annual cost under section 7C — covered below.
Ongoing annual costs
A trust is an ongoing entity, and running it properly costs money every year. The recurring items are:
- Independent trustee fees — a well-run trust appoints at least one genuinely independent trustee, who charges for the role. That fee is not optional padding: the independence is what keeps the trust from being treated as the founder’s alter ego.
- Annual accounting — preparing the trust’s financial statements and loan account reconciliations.
- SARS returns — every resident trust files an income tax return (the ITR12T) and a third-party reporting return (the IT3(t)) recording each amount it vested in a beneficiary. See SARS trust reporting.
- Legal costs for amendments — varying the deed, changing trustees or updating beneficial-ownership records. The Master charges no fee to lodge an amendment; the cost is the professional work. See amending or terminating a trust.
- Bank charges on the separate trust bank account.
The independent-trustee fee buys something the law actually requires. Trustees must act to a statutory standard of care that cannot be contracted away:
(1) A trustee shall in the performance of his duties and the exercise of his powers act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another. (2) Any provision contained in a trust instrument shall be void in so far as it would have the effect of exempting a trustee from or indemnifying him against liability for breach of trust where he fails to show the degree of care, diligence and skill as required in subsection (1).
The two SARS filings are the reason annual accounting is not optional: SARS matches the IT3(t) data a trust submits against what its beneficiaries report, so the trust’s records have to be properly kept to reconcile. The trust return guide ties the tax treatment to the rights each beneficiary holds:
Under a vesting trust the income or capital gains or assets of the trust are vested in the beneficiaries, and the beneficiaries are said to have vested rights to the income or assets of the trust. … Under a discretionary trust, the trustees usually have the discretion as to whether and how much of the income or capital of the trust to distribute to the beneficiaries. In these circumstances, the beneficiaries merely have contingent/discretionary rights (hope or spes) to the income or capital of the trust …
The ongoing section 7C cost on a low-interest loan
If you fund the trust with an interest-free or low-interest loan to dodge up-front donations tax, section 7C charges you a recurring cost instead: the difference between the interest the trust actually incurs and interest at the official rate is treated as a donation on the last day of each year of assessment. The test is interest incurred — a genuine, enforceable obligation — not cash paid.
(3) If a trust or company incurs— (a) no interest in respect of a loan, advance or credit referred to in subsection (1), (1A) or (1B); or (b) interest at a rate lower than the official rate of interest, an amount equal to the difference between the amount incurred by that trust or company during a year of assessment as interest in respect of that loan, advance or credit and the amount that would have been incurred by that trust or company at the official rate of interest must, for purposes of Part V of Chapter II, be treated as a donation made to that trust by the person referred to in subsection (1)(a), (1A) or (1B) on the last day of that year of assessment of that trust or company.
Note — “Part V of Chapter II” is the donations-tax Part of the Act, so the forgone interest is taxed as a donation. The verbatim text is reproduced in SARS’s Draft Interpretation Note on loans to trusts (26 November 2025).
The official rate is the Reserve Bank repo rate plus one percentage point, applied from the first day of the month after a repo change. The Reserve Bank raised the repo rate to 7.25% with effect from 25 September 2026, so the official rate is 8.25% from 1 October 2026 (8% from 1 June to 30 September 2026; 7.75% from 1 December 2025 to 31 May 2026) — so a R6 million interest-free loan generates R495,000 of deemed donation in a full year at a constant 8.25%, and the actual figure for a year follows the rate in force for each period.
01.06.2026 — Until change in Repo* rate — 8.00% … Note: The official rate of interest is linked to the Repo rate plus one per cent. The official rate is applied from the first day of the month following the date on which that new Repo rate comes into operation.
Note — The Reserve Bank’s May 2026 MPC statement raised the repo rate to 7%, so the official rate (repo + 1%) was 8% from 1 June 2026. On 23 September 2026 the MPC raised the repo rate to 7.25%, effective 25 September 2026 (SAnews), so under the rule quoted above the official rate is 8.25% from 1 October 2026. SARS has not yet reissued Table 3 for that change — the June 2026 issue quoted here still shows 8%. Re-check this rate each year — it moves with the repo rate.
When a trust earns its keep
Setup is largely fixed and the annual overhead is roughly fixed too — an independent trustee, accounting, two SARS returns and any section 7C cost do not scale down for a small estate. That makes the cost-benefit a question of asset value: the same overhead is trivial against a R20 million property portfolio and disproportionate against a R500,000 holding.
The rates that drive this calculation — the ones you are weighing against the running cost — are summarised here:
| Tax | Applies to | Rate (2026) |
|---|---|---|
| Income tax — trust | Taxable 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, on the sliding scale) | Up to 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. shares in a trading company that is not a residential property company. Exempt under s 8(1)(n) of the STT Act where the unlisted security is an acquisition of “property” subject to transfer duty (or a supply subject to VAT) — as it is when Newco is a residential property company and the trust buys its shares | 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 + 1%; 7.75% 1 Dec 2025–31 May 2026; 8% 1 Jun–30 Sep 2026) | 8.25% (from 1 Oct 2026) |
| Transfer duty | Acquiring property — sliding scale | 0% to R1.21m … 13% above R13.31m |
Last reviewed: 29 September 2026. Rates are South African and time-sensitive. The R150 000 / R20 000 donations-tax exemptions are the figures SARS currently publishes; they come from clause 9 of the 2026 Draft Rates Bill (deemed effective 1 March 2026) and we have not located the promulgated amendment, so treat them as SARS-published rather than quoted statute. The official rate of interest changes with the repo rate, so a section 7C figure must follow the rate for each period. A special trust is taxed on the individual sliding scale (CGT up to 18%), not the flat 45% / 36% that applies to an ordinary trust; the 18% figure is a maximum effective rate, not a flat rate on every gain. Confirm every figure against the current SARS material before acting.
Frequently asked questions
Once-off setup is mainly attorney drafting of the deed plus the Master of the High Court lodgement (the Master’s fee is R250 per trust instrument) and any notarisation. Extra costs only arise if you move assets in: conveyancing and transfer duty on property, CGT in your own hands on an asset or shares you sell or donate to the trust, and donations tax (20%, with an annual exemption SARS publishes as R150,000) on donated assets. We register trusts on a fixed fee so the deed-and-Master cost is known up front.
Recurring costs are independent trustee fees, annual accounting and the SARS returns (the income tax return ITR12T plus the IT3(t) reporting return), legal fees for any deed amendments, and bank charges. If the trust was funded by a low- or no-interest loan there is also an annual section 7C cost while that loan is outstanding.
Not in absolute terms, but it carries real annual overhead — an independent trustee, accounting and two SARS filings every year, plus any section 7C cost on a funding loan. The cost is roughly fixed regardless of asset value, so it is light against a meaningful estate but disproportionate against a small one. A trust earns its keep only above a real asset threshold.
Donations tax is 20% of the value donated (25% on cumulative donations above R30m), paid by the donor. Natural persons get an annual exemption SARS publishes as R150,000 (2026 Draft Rates Bill, clause 9; promulgation not located), up from R100,000. Most founders avoid this up-front cost by lending rather than donating, but a low-interest loan then triggers an annual section 7C deemed donation.
It is worth it where the protected value is meaningful and growing — a let or business property, a portfolio, or assets you want pegged out of your estate for estate-duty and continuity reasons. The overhead is largely fixed, so it is easily justified on a substantial estate but rarely on a modest one. Model the estate-duty saving against the ongoing costs before you commit.