The three compliance pillars
Three pillars keep the structure standing: how the trustees conduct themselves, the transparency registers the law now requires, and the returns SARS expects. Company-law housekeeping sits alongside them.
Pillar 1 — trustee conduct
Trustees must act with real care and independence. The standard is set by statute and 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).
Note — Section 9 has not been amended — this is the original 1988 wording and is current. The duty cannot be diluted by a clause in the trust deed: s 9(2) makes any such exemption or indemnity void.
The practical lesson — appoint at least one genuinely independent trustee, hold real meetings, and minute real decisions — is covered in trustees’ duties. This does not mean the founder must give up every practical role: a founder can serve as a trustee. It means the trustees must actually exercise their powers, together, under the deed and the law, rather than treating trust property as the founder’s own.
Why this matters so much: where the founder keeps real control and the other trustees are mere figureheads, a court can treat the trust as the founder’s alter ego and look through it. That test comes from Badenhorst v Badenhorst [2005] ZASCA 116; 2006 (2) SA 255 (SCA), a divorce case: trust assets can be counted as a party’s own where that party controlled the trust and, but for the trust, would have acquired and owned the assets in his own name — and, in the court’s words at [9], “Control must be de facto and not necessarily de iure.” In Parker, the Supreme Court of Appeal pointed to a genuinely independent trustee as the way to keep control separate from enjoyment:
Two limits on that lesson. First, appointing an independent trustee is not by itself a cure for defective administration: a name on the letters of authority who never attends, never questions and simply signs what is put in front of them changes nothing. The trustees must actually do the job. Second, a properly established and administered trust can separate trust property from a trustee’s personal property and can support succession planning, but it does not create automatic protection from all creditor claims. Any loan owed to you, vested entitlement or relevant retained power must be considered separately when assessing your estate and exposure.
The same risk runs through the tax structuring. SARS — and the courts — will look past the paperwork to what the arrangement really is. The SCA put the substance-over-form test this way:
Read NWK for what it decides: whether the parties genuinely intended the transaction they documented, judged by its commercial substance. A transaction that is genuinely intended and actually implemented is not simulated merely because tax considerations drove the choice of structure. The point for a family trust is that the paperwork must describe what really happens.
Pillar 2 — transparency registers
Since South Africa’s anti-money-laundering reforms, both the trust and the company must keep registers of who really stands behind them — two separate filings with two different regulators: the trust register at the Master (TPCA s 11A) and the company register at CIPC. Read the detail on beneficial-ownership registers.
The trust-side duty is on the trustee, inserted into the Trust Property Control Act by the 2022 anti-money-laundering reforms:
(1) A trustee must— (a) establish and record the beneficial ownership of the trust; (b) keep a record of the prescribed information relating to the beneficial owners of the trust; (c) lodge a register of the prescribed information on the beneficial owners of the trust with the Master’s Office; and (d) ensure that the prescribed information referred to in paragraphs (a) to (c) is kept up to date. (2) The Master must keep a register in the prescribed form containing prescribed information about the beneficial ownership of trusts.
Note — Section 11A was inserted by s 6 of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, with effect from 1 April 2023.
The trust register is lodged electronically only, on the Master’s online Trust Beneficial Ownership Register system, under Chief Master’s Directive 8 of 2023 (effective 17 October 2023) — there is no paper route, and reporting beneficial ownership to SARS on the ITR12T does not count as lodging it with the Master. A new trust registered through the Master’s Online Trust Registration System (available for Master Pretoria and Master Johannesburg since 1 April 2025 under Chief Master’s Directive 2 of 2025) has its details fed into the Master’s register automatically; the trustees must still keep it up to date.
No, the information can only be loaded electronically – no hard copy lodgement will be accepted. … No, reporting BO information to SARS does not constitute compliance with the Trust Act.
Note — The same FAQ says that once anything you reported changes, you must update the register “within a reasonable time after such change took place”. A dormant trust (never economically active, no bank account and no property) and a formally terminated trust are exempt once the trustee emails the Master a declaration on the Master’s template.
The penalty for failing the trust beneficial-ownership duty is severe — these are not optional records:
A trustee who fails to comply with an obligation referred to in section 10 (2), 11 (1) (e) or 11A (1), commits an offence and on conviction is liable to a fine not exceeding R10 million, or imprisonment for a period not exceeding five years, or to both such fine and imprisonment.
Note — The offence sits in s 19 (“Failure by trustee to account or perform duties”), substituted by s 7 of Act 22 of 2022 (wef 1 April 2023). It is the failure to comply with s 11A(1) — the beneficial-ownership obligation quoted above — that triggers this penalty.
Pillar 3 — SARS reporting
SARS now receives detailed third-party data on trusts. An ordinary resident family trust — the kind this guide is about — files an annual IT3(t) reporting every amount it vested in a beneficiary, plus its income tax return (ITR12T), and SARS matches the two. (The IT3(t) rules reach further than resident family trusts and have their own exclusions, so check whether your trust falls within the current requirements.) The rights conferred on beneficiaries — vested versus discretionary — drive the treatment. See SARS trust reporting.
Keep reporting and tax entitlement apart. The tax return, the IT3(t) and the beneficial-ownership filings are separate obligations. Reporting a vesting on the IT3(t) does not by itself establish that section 25B or paragraph 80 shifts the tax to the beneficiary — that depends on whether those provisions’ own requirements are met.
The 2026 filing season ties the two returns together more tightly. SARS’s notice of 18 September 2026 records that the ITR12T’s “Income Vested Containers” and beneficiary schedules are now pre-populated from the IT3(t) (as are the beneficiaries’ own ITR12 and ITR14 returns), that a new container on the ITR12T analyses the limit on deductions against vested income in section 25B(4) to (6), and that the return now indicates that all trusts are required to file — active or passive (“dormant”) alike. The dates come from SARS’s notice of 8 September 2026: the IT3(t) is due 30 September 2026, and the ITR12T season runs from 19 September 2026 to 22 January 2027.
SARS’s own guide draws the line between the two kinds of right:
A) 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. The beneficiaries are the true owners of the trust capital and income, whilst the trustees are only empowered to administer the trust fund (in a Bewind trust). B) 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 (note: it is also not uncommon to find hybrid rights within a trust – this means that one trust instrument may include vested and discretionary rights).
Note — For the return, the guide (para 5.13 b)(ii)) says a distribution “refers to amounts vested in the trust beneficiaries”, and that “vesting … is an indispensable prerequisite for the distribution to occur.” On who files, para 3.2 c)(i): “All resident trusts are obliged to file annual income tax returns (ITR12T) irrespective of their economic activity.”
The annual compliance cycle
- Hold genuine trustee meetings and minute real decisions; keep the trust bank account separate; confirm every serving trustee holds current letters of authority (those issued since 18 March 2025 are system-generated with a QR code that verifies them against the Master’s records) and that the deed’s minimum complement is in office.
- Before any company distribution, apply and minute the solvency and liquidity test (Companies Act s 4).
- File the trust’s IT3(t) by its own deadline (30 September 2026 this season; SARS’s position, as recorded by SAICA, is that from the 2025 year a nil (R0) return is filed where nothing was vested) and the ITR12T within the published season (19 September 2026 to 22 January 2027 — every trust files, active or passive, and the IT3(t) data now pre-populates the return); pay provisional tax on its own dates; lodge any IT144 donations-tax returns. Administrative penalties for outstanding ITR12Ts have applied since 4 May 2026.
- Keep the trust’s beneficial-ownership register (Master — lodged electronically only) and the company’s (its own record and the CIPC filing) current — update them when the facts change, not only at annual-return time — and record any trustee or address change with the Master.
- Tell every accountable institution (bank, attorney, estate agent) that you deal as trustee and that the transaction concerns trust property (TPCA s 10(2)); keep the prescribed record of the accountable institutions the trust uses (s 11(1)(e)); preserve the deed and every transaction record — the Act requires them for five years after the trust ends (s 17), separately from SARS’s tax-record retention rules.
- Review the structure yearly — the official rate of interest, the donations-tax exemption, beneficiary residency, and any change in the section 7C interpretation note.
The solvency and liquidity test the company must pass before distributing is set out in the Companies Act:
4. (1) For any purpose of this Act, a company satisfies the solvency and liquidity test at a particular time if, considering all reasonably foreseeable financial circumstances of the company at that time— (a) the assets of the company, as fairly valued, equal or exceed the liabilities of the company, as fairly valued; and (b) it appears that the company will be able to pay its debts as they become due in the ordinary course of business for a period of— (i) 12 months after the date on which the test is considered; or (ii) in the case of a distribution contemplated in paragraph (a) of the definition of ‘distribution’ in section 1, 12 months following that distribution.
Note — Section 4 defines the test for any purpose of the Act; the requirement that the board apply it before authorising a distribution is imposed by s 46. The test has two limbs — solvency (assets, fairly valued, equal or exceed liabilities) and liquidity (able to pay debts as they fall due for the next 12 months).
For the full build-and-run sequence, see the implementation checklist.
The compliance guides
Compliance & governance · 6 guides
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Compliance & governance
6 guidesTrust & Company Compliance· hub
The governance and transparency obligations that keep a structure standing.
Read guideBeneficial-Ownership Registers
Two filings: the trust register at the Master (TPCA s 11A) and the company register at CIPC.
Read guideSARS Trust Reporting
The annual IT3(t) and ITR12T returns, and how SARS matches them.
Read guideCompany-Law Housekeeping
Solvency & liquidity, financial assistance (ss 44/45) and director conflicts (s 75).
Read guideImplementation Checklist
A practical, ordered sequence for building the structure correctly.
Read guideThe Regulation of Trusts Bill, 2026
The draft Bill that replaces the Trust Property Control Act — annual returns, financial statements, administrative fines, and what it costs you.
Read guide
Frequently asked questions
The trust keeps its beneficial-ownership register current — lodged electronically with the Master and updated when the facts change, not only once a year — files its IT3(t) and ITR12T, and runs as a genuine trust. The company keeps its own beneficial-ownership record and CIPC filing current in the same way (the annual return is not a substitute), passes the solvency and liquidity test before distributing, and keeps its records.
Not every practical role — a founder can be a trustee and a beneficiary. What the law requires is that the trustees actually exercise their powers under the deed and the law, and do not treat trust property as the founder’s own. If they do, a court may treat the trust as the founder’s alter ego and look through it — the test, from Badenhorst v Badenhorst [2005] ZASCA 116 (SCA), is whether the founder controls the trust in fact (not necessarily in law) and, but for the trust, would have acquired and owned the assets in his or her own name. An independent trustee helps, but is not by itself a cure for defective administration, and even a well-run trust does not protect automatically against all creditor claims. See trustees’ duties.
On conviction, up to R10 million or five years’ imprisonment for the specified failures under the Trust Property Control Act; and a company cannot file its annual return without its CIPC beneficial-ownership filing. See beneficial-ownership registers.