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The possible impact of the new trust tax return (ITR12T)

June 2015

The new ITR12T trust tax return was issued by SARS during October 2014 and must be used for the submission of all trust tax returns after 6 October 2014.

Even from a mere cursory glance at the new return it is clear that SARS will use the new return as an information collecting tool to see how trusts have been used in tax planning.  SARS has on many occasions over the course of the last few years stated that it will look more closely into the use of trusts as tools used for tax and wealth planning.

The new return is custom-generated based on a series of specific questions, which the person submitting the return will be asked, so that the return only creates the sections that are applicable to that trust.

The first page of the new return makes it evident that SARS intends to focus on transactions with "related persons".

The details of each person who has:

  • received a distribution from the trust; 
  • had a right to income or capital vested in him or her; 
  • granted a loan to the trust or was granted a loan from the trust; and 
  • made or received donations to or from the trust or was given the right to use a trust asset

must be disclosed, together with the details of the transaction. 

The information disclosed in the new ITR12T will have a ripple effect in that SARS is now more likely to audit and request information from each of the persons who were party to significant related transactions with the trust.

SARS may not yet have the resources and skills available to use information obtained from the new return to its full extent, but we expect trusts to be one of the focus areas of SARS officials in years to come.

While many tax practitioners may in the past have completed tax returns for trusts without being overly concerned about the exact details of the trust deed, the passing of legally accurate trust resolutions and the dates of appointment of trustees, the new return makes it clear that SARS has lifted the standard of its information collection and now knows exactly what it is looking for.  As a result, tax practitioners and their clients will have to ensure that their affairs are in order and that they understand the meaning and impact of each question in the new return. 

The team

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