Trusts in South Africa: Comprehensive FAQ [2026]

You draft and sign a trust deed, then lodge it with the Master of the High Court, who issues letters of authority to the trustees — and the trustees may only act once those letters are issued. Budget for the Master’s lodgement, a separate trust bank account, and the beneficial-ownership register. See how to register a trust.

There is no statutory minimum number, but appointing at least one genuinely independent trustee is strongly recommended. If the founder controls everything and the trustees are figureheads, a court can treat the trust as the founder’s alter ego (the Parker problem) and disregard it — undoing both the asset protection and the tax planning.

In a discretionary trust the trustees decide each year whether and how much to distribute, so beneficiaries hold only a hope (spes) of benefiting. In a vesting trust the beneficiaries already have fixed, vested rights. The distinction drives the tax treatment and SARS’s IT3(t) reporting of every amount vested.

A person reaches majority at 18 (section 17 of the Children’s Act 38 of 2005). That age matters because the attribution rules in section 7 of the Income Tax Act — which loop a minor child’s vested income and gains back to the funding parent — apply only while the child is a minor and fall away at 18.

A trust that retains income is taxed at a flat 45% — the highest rate in the system. This is why most planning relies on the conduit principle: income vested in a resident beneficiary in the same year is taxed in that beneficiary’s hands, often at lower rates, not in the trust. See trust taxation.

An ordinary trust pays CGT at an effective rate of 36% (the 80% inclusion rate × the 45% statutory rate). An individual in the top bracket pays 18%, a company 21.6%, and a special trust is on the individual sliding scale. The 18% figure is the individual rate — never the ordinary-trust rate.

SARS multiplies the inclusion rate by the statutory rate. For an ordinary trust that is 80% × 45% = 36%; for a company 80% × 27% = 21.6%.

Donations tax is a 20% tax (25% on cumulative donations above R30 million) paid by the donor on the value of anything given away for nothing or for too little. The annual exemption for natural persons is R150,000 — announced in the 2026 Budget, subject to Parliament’s legislative process — up from R100,000.

Yes — a donation to a spouse who is not separated from the donor is exempt. As announced in the 2026 Budget (subject to Parliament’s legislative process), the exemption is limited to a resident spouse from 25 February 2026, so a gift to a non-resident spouse may no longer qualify.

Section 7C catches an interest-free or low-interest loan to a trust (or to a company at least 20% held by that trust). The interest you give up is treated as a fresh annual donation. See section 7C loans.

The official rate of interest is 8% from 1 June 2026 — the Reserve Bank repo rate (7%) plus one percentage point. It is the benchmark for the section 7C deemed donation, so a loan below 8% generates a charge. Confirm the current figure against SARS’s Table 3.

Rent received by the company is taxed in the company at 27%. When the company pays a dividend up to the trust, dividends tax of 20% is withheld — the conduit principle does not switch that off; it is a separate, largely final tax. Returns of contributed tax capital are treated differently and are not subject to dividends tax.

Because of the attribution rules. Where a child benefits by reason of a parent’s donation or disposition, section 7(3) deems the income to be the parent’s, and paragraph 69 does the same for capital gains — so vesting in a minor generally loops back to the funding parent.

A trust acts as a conduit: income it receives and vests in a resident beneficiary in the same year is taxed in that beneficiary’s hands, not the trust’s. Only income that stays in the trust is taxed in the trust at 45%. Since 1 March 2024 the conduit only flows to a resident beneficiary with a vested right.

It is a roll-over relief that lets a person hand an asset to a resident company and receive equity shares in exchange. If the person holds a qualifying interest afterwards (for an unlisted company, at least 10% of the equity shares and voting rights), no immediate CGT arises — the gain is deferred, not forgiven. See section 42 in depth.

Usually not, where the asset is capital-held property. The s 42(5) recharacterisation is gated: it bites only where more than 50% of the value of the assets rolled in is attributable to allowance assets or trading stock — which a capital-held rental generally is not. The real 18-month risk is s 42(7) ring-fencing if the company on-sells the asset early. Letting the 18 months run remains conservative.

There are two routes. For a residential, non-VAT-vendor transferor, s 9(1)(l)(i) of the Transfer Duty Act exempts a section 42 transfer. Where both parties are VAT vendors in a going-concern supply, the s 9(15A) route plus s 8(25) of the VAT Act applies. A residential rental like the Nkosi property uses the s 9(1)(l)(i) route.

Securities transfer tax is 0.25% of the taxable amount. It bites when the company’s shares are transferred to the trust — but not when the trust subscribes for new shares (an issue is not a transfer). Transfers under the Part III roll-over rules (ss 42–47) are exempt.

A paragraph (a) special trust is a disability trust (inter vivos or testamentary, for a person with a disability per s 6B). A paragraph (b) trust is a testamentary trust for a deceased’s minor relatives. Only the paragraph (a) disability trust is within the s 7C(5)(c) exclusion, and special trusts are taxed on the individual sliding scale.

Two separate filings. The trustees lodge a beneficial-ownership register for the trust with the Master under s 11A of the Trust Property Control Act. Separately, the company files its information with CIPC — and since 1 July 2024 a company cannot file its annual return unless that filing is in place.

A resident trust files an annual IT3(t) return reporting every amount it vested in a beneficiary — income, capital gains and capital distributions — generally by 30 September, in addition to its income tax return (the ITR12T). SARS matches the IT3(t) data against beneficiaries’ returns, so the two must line up.

Not once the trust owns the shares. Section 75 of the Companies Act only switches off the conflict rule where one person both holds all the beneficial interests and is the only director. Once the trust holds the shares, the founder-director must disclose the interest and have the trust approve the conflicted agreement by ordinary resolution — or appoint an independent co-director.