New SARS Regulations for Trusts and Companies in 2024 Tax Season

*Please note that the following blog is not related to employees’ tax. However, if you’re interested in the taxation of trusts or corporations, you may find it informative.

The South African Revenue Service (SARS) has introduced several tax changes and documentation updates for the 2024 tax season.

This marks the first time that trusts have their own filing season, from 16 September 2024 to 20 January 2025. This is the result of the regulatory changes in 2023 and 2024 that allow SARS to more thoroughly investigate the tax matters of trusts.

Previously, SARS expanded its third-party reporting requirements to include both local and foreign trusts, requiring them to submit specific third-party information. This forms part of their efforts to curb non-compliance and improve collection.

Several other significant changes have been made to the income tax returns of trusts, and these changes are continuing into the 2024 tax season.

2024 Tax Season Timeline

The deadline for trusts to submit IT3(t) third-party data returns, which include all amounts vested in beneficiaries, was 30 September 2024. These returns cover not only income but also capital gains and repayments of contributions. Trustees are responsible for accurate and timely submissions, but they may delegate this task to a tax representative or tax practitioner.

Key Changes for Trusts in the 2024 Tax Season

1. Beneficial Ownership

• Trusts must now provide comprehensive information on their beneficial owners, including beneficiaries. Accurate reporting is critical for compliance.

2. Income and Activities

• Detailed reporting on all income sources and the nature of the trust’s activities is now required, ensuring that trusts are used appropriately and transparently.

3. IT3(t) Reporting

• SARS has modernised its third-party data requirements, making it mandatory for trusts to annually declare distributions to beneficiaries through IT3(t) reporting.

4. Compulsory Supporting Documents

• Trusts are required to upload supporting documentation, such as financial statements and resolutions, when filing their tax returns. This ensures that all financial activities are properly documented for compliance.

Other Tax Changes

Recent changes made by SARS also include:

• Enhanced deductions for renewable energy investments.
• Extension of the Urban Development Zone (UDZ) tax incentive to 31 March 2025.
• Clarifications on loans and donations related to trusts.
• Updates to the Beneficial Ownership section of the income tax return for trusts (ITR12T), to ease reporting for unnamed beneficiaries.

Corporate Tax Changes

Corporate Income Tax has also seen updates, mainly focused on clarifying existing rules. Changes include:

• Restrictions on claiming depreciation for assets acquired through government grants.
• The addition of a new field to the income tax return for companies (ITR14), for “Credit agreement and debtors allowance (Lay-by) (s24)”.
• Deductions related to learnership agreements, and Research and Development (R&D) incentives.
• Introduction of new functionality for managing reduced assessment requests under the Tax Administration Act.

These changes reflect SARS’s continued efforts to streamline tax compliance and improve transparency across both trusts and corporate entities.

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Take care,

Team SimplePay

Resources:

• Corporate Income Tax
• Trusts
• Update on changes for Filing Season 2024
• Updated Guides for Filing Season 2024