Trusts are powerful financial and estate planning tools, but they also come with complex tax obligations. As a trustee in South Africa, you carry the legal responsibility of ensuring your trust complies with all SARS requirements.
At Leozzy Accounting, we offer specialized trust tax services to help you navigate these obligations with confidence and precision. Here’s what trustees need to know.
🧾 1. Trusts Are Separate Taxpayers
In South Africa, a trust is considered a separate legal taxpayer. This means it must register with SARS and file annual income tax returns (ITR12T), just like an individual or company.
Even if the trust earns no income, a zero return must still be submitted to remain compliant.
💼 2. Trustees Are Personally Liable
Trustees are legally responsible for the financial and tax affairs of the trust. If SARS finds that a trust has failed to meet its obligations, trustees may be held personally liable for penalties and unpaid taxes.
That’s why having a professional tax partner is essential.
📋 3. Income Tax Rules for Trusts Are Strict
Trusts are generally taxed at a flat rate of 45%, making it one of the highest tax rates in the country. However, proper planning can reduce this burden—for example, by distributing income to beneficiaries, who may be taxed at a lower rate.
An experienced tax advisor can help determine the best strategy based on your trust’s goals.
📊 4. Annual Financial Statements Are Required
Trusts must maintain accurate financial records and produce Annual Financial Statements (AFS). These are necessary for:
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Preparing tax returns
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Audits and reviews
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Legal and compliance purposes
At Leozzy Accounting, we prepare AFS in line with SARS and fiduciary requirements.
📅 5. Provisional Tax May Apply
If your trust earns taxable income not subject to PAYE, it may need to register and pay provisional tax twice a year. This includes investment income, rental income, or business income earned through the trust.
Missing deadlines can result in penalties and interest, so it’s crucial to stay ahead.
🛡️ 6. Trust Distributions Must Be Recorded Correctly
If your trust distributes income or capital to beneficiaries, those transactions must be:
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Documented in trust resolutions
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Reflected correctly in the trust’s tax return
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Aligned with the terms of the trust deed
Improper distribution reporting can trigger SARS audits or disputes.
🔍 7. SARS Is Watching Trusts Closely
Trusts are often scrutinized due to potential misuse for tax avoidance. SARS is actively monitoring trusts for non-disclosure, unfiled returns, and unexplained wealth. Maintaining full transparency and accurate reporting is critical.
🤝 How Leozzy Accounting Helps Trustees
Our Trust Tax Services include:
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SARS trust registration and tax return submissions
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Annual Financial Statement preparation
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Beneficiary distribution planning and tax optimization
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Provisional tax calculations and reminders
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Audit support and compliance checks
📞 Need Help Managing Your Trust’s Taxes?
Being a trustee comes with serious responsibilities—but you don’t have to manage it alone. At Leozzy Accounting, we offer trusted expertise to help you stay compliant and make the most of your trust’s financial potential.
Contact us today to book a consultation.
