Trustworthy: trustees to start preparing for third-party data (IT3(t)) submission to Sars

Since 2023, the South African Revenue Service (Sars) has categorised trustees as third-party data submitters alongside banks and other financial institutions, which are required to report their figures to Sars so that Sars can pre-fill this information in the relevant persons’ tax returns, aiming to prevent tax leakage. This has had a substantial impact on how trustees manage trusts and on various individuals involved with trusts, such as donors, funders, and beneficiaries. 

Why third-party data?

Sars explains on their website that third-party data is required for various purposes in administering the Income Tax Act, such as but not limited to verifying whether a person has filed or provided the correct information in their tax returns, ensuring that the information or documents comply with the provisions of relevant tax legislation, and determining a person’s tax liability. 

Whose responsibility is it?

Sars made trustees liable for submitting the IT3(t)s. While trustees can use trust service providers, they remain ultimately responsible. Earlier this year, Sars emphasised that trustees have personal legal liability for their trusts’ tax obligations, even if they use a tax practitioner. The comment was made that “Sars will hold all the trustees of a trust jointly and individually liable for their trust’s tax compliance.”

Who is affected?

Focusing on amounts vested in beneficiaries, Sars initially announced in the Government Gazette on June 30, 2023, that “resident” trusts and non-resident trusts required to submit annual income tax returns, excluding “Collective Investment Schemes” and Employment Share Incentive Scheme Trusts, must submit IT3(t)s. Although the Business Requirements Specification: IT3 Data Submission states that null returns are needed if no distributions or vestings occurred, Sars exempted the submission of null returns in the first test year in 2024. Starting this year, trustees must submit null returns if no distributions were made, and include all named beneficiaries on the IT3(t), excluding beneficiaries in classes who have previously received distributions or vestings. 

Which amounts are to be included?

The Government Gazette requires that any amount vested in a beneficiary, including income (net of expenses), capital gains, and capital amounts, be reported in the IT3(t). However, the Sars website states that trustees must report amounts vested to beneficiaries within a tax year, regardless of whether the amount was paid or credited to a loan account in favour of the beneficiary, or amounts vested where they are subject to a donation, settlement, or other disposition, and where the donor is liable for tax on those amounts (regardless of whether they were paid or credited to a loan account in favour of the beneficiary).

This broadens the scope of IT3(t)s to include amounts attributed to donors and funders, provided those amounts were distributed to or vested in beneficiaries. The Sarsars Business Requirements Specification: IT3 Data Submission also extends this requirement to include donors and funders. While it is clear that the primary focus of the IT3(t) is on amounts distributed or vested to beneficiaries, this expanded scope to include all or some donors or funders and controllers of trust distributions other than donors or funders requires clarification from Sars for the following reasons:

• The Business Requirements Specification: IT3 Data Submission generally refers to Section 7 (covering income), which may include distributions to spouses and minor children, as well as distributions to any beneficiaries (while a person retains a veto right or can decide who benefits from the trust on an annual basis). It specifically refers to the relevant capital gains distributions in terms of Paragraphs 68 to 72 in one section, whereas the rest of the document only mentions Paragraph 68 (which deals solely with distributions of capital gains to spouses) and does not address capital gains distributed to minor children or amounts distributed to beneficiaries (while a person retains a veto right or can decide who benefits from the trust on an annual basis). The Sars website appears to have only included “donors” and not controllers of trust distributions in terms of Section 7(6) of the Income Tax Act for income distributions or vestings and its corresponding capital gains Paragraph 71 of the Eighth Schedule to the Income Tax Act.
• Amounts not distributed to beneficiaries but retained in the trust under Section 7(5) of the Income Tax Act (for income) and Paragraph 70 of the Eighth Schedule to the Income Tax Act (for capital gains) currently appear to be excluded, which may be an unintended omission by Sars.

When must it be submitted?

Similar to last year, the deadline for submitting the IT3(t)s is September 30, 2025. However, the submission channel will remain open after September 30, 2025, to allow trustees to still file IT3(t)s post-deadline.

Fit into the tax timetable

As the same information relating to trusts will be submitted by different people at various times in 2025 and 2026, trustees should communicate the relevant information to the donors, funders, controllers of trust distributions, and beneficiaries of the trust in a timely manner. Already, on February 28, 2025, trustees had to ensure that donors, funders, controllers of trust distributions, and beneficiaries were informed about the information relevant to them, as they needed to include that in their respective provisional tax returns.

Provisional tax payments are a way of paying a person’s income tax liability in advance, to prevent the taxpayer from having a large tax debt on assessment. Since many of these individuals might not otherwise qualify as provisional taxpayers, the inclusion of these amounts will make them qualify as such, and they must meet their obligations as provisional taxpayers.

A donor, funder, or controller of trust distributions, and beneficiary must submit provisional tax returns if they receive more than R 30,000 taxable income per year from interest, dividends, foreign dividends, and rental income from letting of fixed property, in the form of attributions to the donor, funder, or controller of trust distributions, or the form of vestings in the beneficiary from various trusts, as well as other sources.

They must also submit provisional tax returns if their taxable income (from which no employees' tax was deducted by an employer), including that from the above sources, exceeds the tax threshold (R 95,750 if aged under 65, R 148,217 if aged 65 to 74, and R 165,689 if aged 75 and older). They must also include attributed, distributed, or vested amounts from trusts in their provisional tax returns if they carry on a business and are already required to submit provisional tax returns.

From July 7 to 20, 2025, Sars issued auto-assessments for most non-provisional taxpayers and some provisional taxpayers. If you need to include the above amounts in your tax return, you must correct your auto-assessment by October 2025 (for non-provisional taxpayers) or January 19, 2026 (for provisional taxpayers). Failing to correct your return may result in penalties, interest, and possibly even criminal charges. 

If you were not auto-assessed and are a provisional taxpayer, you have from July 21, 2025, to January 19, 2026, to submit your tax return, and you must remember to include the above amounts in your tax return.

The trustees have from September 19, 2025, to January 29, 2026, to submit the trust’s tax return, whether it is considered a provisional or non-provisional taxpayer. The tax return should also reflect the same amounts attributed to donors, funders, and controllers of trust distributions and those vested in beneficiaries. The IT3(t) requires the same information as captured in the trust tax return, excluding loan data needed on the trust tax return.

All the above taxpayers must communicate regularly to ensure that the various amounts are reflected promptly and accurately on the respective submissions to Sars.

Penalties for late or non-submission

Currently, there are no penalties for late or non-submissions, but trustees are advised to submit the IT3(t)s on or before September 30, 2025. Since various issues can cause delays- such as the registration of a representative taxpayer on efiling or the trust number on efiling being different from the trust number with the Master- trustees are encouraged not to wait until the last minute to submit. 

Conclusion

It is evident that trustees must keep trust records up to date to communicate the necessary information for including amounts in other persons’ submissions to Sars at various times during the year. Trustees should develop the discipline to consistently communicate with donors, funders, controllers of trust distributions, and beneficiaries to avoid penalties and interest imposed by Sars.

* Van der Spuy is a Chartered Accountant with a Masters degree in tax and a registered Fiduciary Practitioner of South Africa®, a Chartered Tax Adviser, a Trust and Estate Practitioner (TEP), and the founder of Trusteeze®, the provider of a digital trust solution.

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