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The South African Revenue Service (“SARS”) implemented several changes to the income tax returns for trusts (the ITR12T) on 17 September 2018. These changes are in addition to the changes already made on 26 February 2018. The September 2018 changes apply in respect of the year of assessment ending on 28 February 2018. Taxpayers that already saved or submitted the relevant 2018 ITR12T prior to the implementation of the latest changes, will not be presented with any of the new fields for completion.

Similar to the February 2018 changes, these additional changes form part of SARS’ ongoing efforts to promote efficiency and compliance.

Three new fields will be pre-populated on the ITR12T. The first is the “Trust Type”. Validation questions will be presented for a response if the Trust Type is Special Trust Type A or B. The Trust Type may change based on the answers provided.

The second and third fields relate to income from local farming operations (IT48) and income from local partnership farming operations (IT48V). These fields will now include auto-calculations and cater for negative currency to be captured.

Where applicable, trustees will now also be able to select one or both of the following options: “vested” and “discretionary”.

The ITR12T wizard has also been updated to include a question pertaining to imputed income from controlled foreign companies (“CFC”). If this question is answered yes, the ITR12T will display a new container to be completed. Please note that trusts, together with any connected person in relation to the trust, that holds at least 10% of the participation rights in a CFC, will also be required to submit a completed IT10B form (or IT10A form for years prior to 2012).

More fields have been added to the ITR12T with regards to the reduction of debts (section 19 of the Income Tax Act[1]), cash contributions to a rehabilitation trust fund (section 37A of the Income Tax Act) and amounts in respect of certain (tainted) intellectual property (section 23I of the Income Tax Act).

Furthermore, SARS indicated that the following documents should be submitted with the ITR12T (as a minimum) and include financial statements and/or administration accounts, all certificates and documents relating to income and deductions, proof of any tax credits claimed, particulars of assets and liabilities, as well as details of persons or beneficiaries to whom income, capital and/or assets were distributed or vested.

The take away is that trusts should carefully consider these new requirements in order to ensure that the relevant ITR12T is completed correctly. For more information on these new fields, an example of the new ITR12T form is available on SARS’ website for consideration.

[1] No. 58 of 1962

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Additional changes to income tax returns for trusts
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