Two returns, not one
SARS now receives detailed third-party data on trusts. A resident trust must file two separate things each year: its income tax return, the ITR12T, which assesses the trust itself; and the IT3(t), a third-party data return reporting every amount the trust vested in a beneficiary during the year — income, capital gains and capital distributions. The IT3(t) is generally due by 30 September.
The ITR12T does the assessing. Income and capital gains kept in the trust are taxed there — income at 45% and capital gains at an effective 36% — while amounts vested in resident beneficiaries flow through under the conduit principle and are taxed in their hands instead. The IT3(t) is the data feed that lets SARS check that flow-through actually happened. The cost of running this compliance is part of the ongoing cost of holding a trust.
That flow-through is not an accounting choice — it is what the Income Tax Act deems to happen. Section 25B(1) says trust income vested in a resident beneficiary with a vested right in the same year is treated as the beneficiary’s income; anything not so vested is treated as the trust’s. The whole rule is expressly “subject to the provisions of section 7”, so the attribution rules can still pull income back to a founder or parent.
(1) Any amount (other than an amount of a capital nature which is not included in gross income or an amount contemplated in paragraph 3B of the Second Schedule) received by or accrued to or in favour of any person during any year of assessment in his or her capacity as the trustee of a trust, shall, subject to the provisions of section 7, to the extent to which that amount has been derived for the immediate or future benefit of any ascertained beneficiary, who is a resident and has a vested right to that amount during that year, be deemed to be an amount which has accrued to that beneficiary, and to the extent to which that amount is not so derived, be deemed to be an amount which has accrued to that trust.
Note — The 2023 substitution added the words [who is a resident and] — so since 1 March 2024 the conduit flow-through reaches only a resident beneficiary; income vested in a non-resident is taxed in the trust. The figures quoted on this page are reviewed periodically and remain subject to enactment of any later Budget measures.
The IT3(t): what gets reported
The IT3(t) reports, beneficiary by beneficiary, every amount the trust vested in that person during the year — not only cash paid out, but income and capital gains vested even where the cash stayed in the trust, plus capital distributions. For each beneficiary the return captures their identifying details and the nature and amount of what was vested. This is the same vesting event that drives the conduit treatment on the ITR12T, reported separately as third-party data so SARS can match it.
Capital gains run on the same conduit, under their own rule in the Eighth Schedule. Where a trust determines a capital gain and a beneficiary has (or acquires) a vested interest in that gain — even by the trustees exercising a discretion — the gain is taken out of the trust’s calculation and brought into the beneficiary’s. That vested gain is exactly what the IT3(t) captures against the beneficiary, and what must then appear on the beneficiary’s own return.
[W]here a capital gain is determined in respect of the disposal of an asset by a trust in a year of assessment during which a trust beneficiary . . . has a vested interest or acquires a vested interest (including an interest caused by the exercise of a discretion) in that capital gain but not in the asset, the disposal of which gave rise to the capital gain, the whole or the portion of the capital gain so vested— (a) must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and (b) must be taken into account for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary in whom the gain vests.
Note — The Court reproduced para 80(2) as it read for the [2014 to 2016 tax years]; the operative conduit wording for a gain vested in a resident beneficiary is unchanged. The same judgment held the conduit does not run through a multi-tiered trust structure — see our Thistle Trust note.
How SARS matches the data
The reason the IT3(t) exists is matching. SARS takes the data the trust files and compares each reported distribution against what the named beneficiary declares on their own return. Because the trust is a conduit, a vested amount is taxed in the beneficiary’s hands — so the figure the trust reports and the figure the beneficiary declares must be the same number. A distribution that appears on the IT3(t) but not on the beneficiary’s return is an obvious mismatch and a natural query or audit trigger.
Reporting the vesting and being taxed on it are two different questions. Even after a vesting is correctly shown on the IT3(t), section 7 can move the tax somewhere else. Where a parent’s donation or disposition into the trust is the reason income reaches their minor child, the Act deems that income to be the parent’s — so the founder, not the child, is taxed, even though the vesting is reported against the child.
Income shall be deemed to have been received by the parent of any minor child or stepchild, if by reason of any donation, settlement or other disposition made by that parent of that child— (a) it has been received by or has accrued to or in favour of that child or has been expended for the maintenance, education or benefit of that child; or (b) it has been accumulated for the benefit of that child.
Note — Section 7 attributes income; the matching rule for a minor’s capital gain sits in the Eighth Schedule, para 69. The whole conduit in s 25B(1) is in any event expressly “subject to the provisions of section 7”, so attribution overrides the flow-through to the beneficiary.
Vested vs discretionary rights drive the treatment
What gets reported, and to whom the tax sticks, turns on the kind of right the beneficiary holds. The SARS trust return guide draws the line between a vesting trust, where beneficiaries already have fixed rights, and a discretionary trust, where they have only a hope of benefiting until the trustees exercise their discretion:
Under a vesting trust the income or capital gain or assets of the trust are vested in the beneficiaries and the beneficiaries are said to have vested rights … 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[; the beneficiaries] merely have contingent/discretionary rights (hope or spes) …
In a discretionary trust nothing is vested in a beneficiary until the trustees exercise their discretion — so there is nothing to report against that beneficiary, and nothing flows through, until they do. Once the trustees resolve to vest an amount, that creates the vested right, triggers the conduit treatment, and becomes a line on the IT3(t). The reporting follows the substance of the right, so trustee resolutions should record clearly what was vested, in whom, and when.
Getting it right each year
Trust reporting is now an annual discipline, not an afterthought. File the ITR12T and the IT3(t) on time (the IT3(t) generally by 30 September), and make sure every vesting reported on the IT3(t) is mirrored on the relevant beneficiary’s return. Keep the trustee resolutions that authorise each vesting, because they are the evidence behind the numbers SARS is matching.
SARS sets and publishes the exact dates each season. A resident trust must register for income tax and file an ITR12T for every year of assessment, while the IT3(t) third-party data return reporting amounts vested in beneficiaries carries its own annual deadline (generally 30 September). Beneficiaries must in turn declare the same trust income on their own returns — the matching this whole page turns on. The exact ITR12T eFiling window and the IT3(t) due date are announced by SARS each season, so always confirm the current year’s dates against SARS’s filing-season notice before relying on them.
Trust reporting sits alongside the other transparency obligations a structure now carries — in particular the separate beneficial-ownership registers lodged at the Master and at CIPC. Since 1 April 2023 the Trust Property Control Act has required every trustee to establish, record and lodge a beneficial-ownership register with the Master’s Office and keep it current. Treat all of these as part of one annual compliance cycle, and diarise the dates so nothing slips.
(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.
Note — Inserted by the [General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022] as part of South Africa’s anti-money-laundering reforms; s 11A(2) separately requires the Master to keep its own register of trust beneficial ownership.
Frequently asked questions
It is the annual third-party data return a trust files with SARS, reporting every amount the trust vested in a beneficiary during the year — income, capital gains and capital distributions — with each beneficiary’s details and the nature of the right. It is separate from the trust’s income tax return (the ITR12T) and is generally due by 30 September.
The trust income tax return (the ITR12T) is due in the filing season SARS announces each year, and the IT3(t) third-party return is generally due by 30 September following the tax year. Both must be filed: the ITR12T assesses the trust, and the IT3(t) feeds SARS’s matching of distributions. Confirm the current dates on the SARS filing calendar.
Yes. A resident trust is a taxpayer and must register and file an ITR12T for every year of assessment, even where no tax is finally payable because income and gains were vested in beneficiaries. On top of that it files the IT3(t) reporting amounts vested. Dormant trusts are not automatically excused — confirm the trust’s status with SARS.
SARS receives the IT3(t) data directly from the trust and compares each reported distribution against what the named beneficiary declares on their own return. Because the trust acts as a conduit, vested income and gains are taxed in the beneficiary’s hands, so the figures must line up. A distribution on the IT3(t) that the beneficiary does not declare is an obvious mismatch and a likely query.
The ITR12T is the trust’s income tax return — the trust equivalent of an individual’s ITR12. It assesses the trust on income and gains kept in the trust (45% on income, an effective 36% on capital gains) and reflects amounts vested in beneficiaries under the conduit principle. The IT3(t) is a separate third-party data return alongside it.