SARS and trusts | new income tax return introduced for trusts
The South African Revenue Service (“SARS”) released a notice on the 23rd of September 2014 which stated that a modernised income tax return for trusts (“ITR12T”) would be introduced to replace the trust tax return (“IT12TR”). SARS confirmed that with effect from the 3rd of October 2014, the IT12TR return will no longer be accepted.
What are the prominent features of the new ITR12T?
- Trust details will be pre-populated and a customised tax return will be created based on answers to various questions.
- There are expanded financial and legal reporting requirements.
- Full details of all parties contributing funds and assets into the trust have to be provided, as well as details of the actual transactions undertaken.
- Full details of any party benefitting in any way from the trust as well as details of the benefits received or enjoyed have to be provided in respect of each beneficiary.
- Assessment results will be obtainable faster than before.
What does this mean for us?
Trustees now have far more onerous obligations in terms of the comprehensive record-keeping responsibilities expected of them. The following details regarding the actual transactions that took place during the tax year will be required to be provided to SARS:
- Details of all parties benefitting from the trust. These details include the ID number and demographic information in respect of the beneficiaries.
- Capital or revenue distributed to or vested in beneficiaries.
- Distributions or vesting of non-taxable income.
- Distribution or vesting of capital or assets.
- Loans granted and received.
- Donations and contributions made or received.
- Distributions received from other trusts or foundations.
- Refunds received of contributions made to the trust.
- The right of use of assets granted.
The information regarding distributions to beneficiaries is mandatory for the new ITR12T. The other information referred to above will only be required with effect from the 2015 tax year.
Trusts with more than ten beneficiaries are required to submit the tax return via eFiling. Trusts with ten beneficiaries or less have the option to submit their returns at a SARS branch or via eFiling.
Supporting documents required:
- Financial statements and/or administration deductions.
- All documentation pertaining to income and deductions.
- Proof in relation to tax credits claimed.
- Particulars of assets and liabilities.
The following schedules must be completed, if applicable:
- If the trust was engaged in mining operations as defined in section 1 of the Income Tax Act Schedules A and B have to be completed.
- If the trust together with any connected person holds at least 10% of the participation rights in any controlled foreign company, an IT10 Schedule must to be completed.
Trustees should therefore ensure that they maintain the necessary records in order to fulfil their responsibilities in relation to the information required by SARS.
Deadline for submission
It is furthermore important to note that the submission deadline for the 2014 tax return is 30 January 2015.
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