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.
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.
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.
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.
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. Treat all of them as part of one annual compliance cycle, and diarise the dates so nothing slips.
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.