SARS Trust Tax 2026 — Complete Guide to Rates, CGT, Special Trusts & ITR12T
Trusts are taxed as separate legal entities under the Income Tax Act 58 of 1962. The default trust tax rate is 45% — the highest income tax rate in South Africa. However, income distributed to beneficiaries may be taxed in their hands instead (the conduit principle), and special trusts pay tax on a sliding scale. This guide covers the rules every trustee and practitioner needs to know for 2026.
Types of trusts and their tax treatment
South African tax law does not have a single "trust tax" — the tax treatment depends on what type of trust it is and what happens to the income (retained by the trust or distributed to beneficiaries). There are two key distinctions to understand first.
Distinction 1 — Inter vivos vs testamentary
| Trust type | How created | Key characteristic |
|---|---|---|
| Inter vivos trust | Created by the settlor during their lifetime | Living trust; common for asset protection and estate planning |
| Testamentary trust | Created by a will; comes into effect on the settlor's death | Created by a deceased estate; often for the benefit of minor children |
Both are treated as separate taxpayers for income tax purposes. The tax rate that applies depends not on this distinction but on whether the trust qualifies as a special trust.
Distinction 2 — Non-special trust vs special trust (the most important tax distinction)
| Non-special trust | Special trust | |
|---|---|---|
| Income tax rate | 45% flat on all retained income | Sliding scale (same as natural persons — no rebates) |
| CGT inclusion rate | 80% | 40% |
| Max effective CGT rate | 36% (80% × 45%) | 18% (40% × max marginal 45%) |
| Who qualifies | All trusts that do not meet special trust criteria | Type A or Type B (see below) |
Source: SARS — sars.gov.za/businesses-and-employers/trusts/types-of-trust/
Distinction 3 — Discretionary vs vesting (affects conduit principle)
| Discretionary trust | Vesting (bewind) trust | |
|---|---|---|
| Income allocation | Trustees have discretion over which beneficiaries receive income and how much | Beneficiaries have a vested right to income in specified shares |
| Tax implication | Income can be vested in beneficiaries in the same year — but the trustees must make the election; undistributed income is taxed in the trust | Income is taxed in the beneficiaries' hands in the year it accrues |
Source: SARS — Step-by-Step Guide to complete Trust return via eFiling; Section 25B of the Income Tax Act
Special trusts — Type A and Type B
Special Trust Type A (disability trust)
A Special Trust Type A is created solely for the benefit of a person with a disability as defined in Section 6B(1) of the Income Tax Act. The beneficiary must be unable to manage their own financial affairs due to the disability.
Source: SARS — types-of-trust/
Special Trust Type B (testamentary family trust)
A Special Trust Type B is created under a will or testamentary document (i.e., a testamentary trust) for the benefit of certain relatives of the deceased/settlor. It qualifies as a special trust only if the youngest living beneficiary of the trust is younger than 18 years of age at the time the trust is terminated.
Source: SARS — types-of-trust/
The trustees must apply to a SARS branch for formal classification of the trust as a special trust. This does not happen automatically. An appointment at the branch is required.
Source: SARS — sars.gov.za/businesses-and-employers/trusts/types-of-trust/ (Top Tip)
Although special trusts pay tax on the same sliding scale as natural persons, they do not qualify for the primary, secondary, or tertiary rebates under Section 6 of the Income Tax Act.
This means: a special trust with taxable income of R99,000 pays tax on that income — it cannot use the primary rebate (R17,820 for 2026/2027) to reduce this to zero as a natural person could.
Source: SARS — types-of-trust/
How trust income is taxed — three possible outcomes
When a trust generates income, there are three possible outcomes for how that income is taxed. Which applies depends on the terms of the trust, the nature of the income, whether it is distributed to beneficiaries, and whether the attribution rules (Section 7) apply.
Income retained in the trust → taxed in the trust at 45%
If income is earned by the trust and not distributed (vested) in any beneficiary during the year of assessment, it is taxed in the hands of the trust at the flat rate of 45% (or at special trust sliding-scale rates if a special trust).
Income distributed to resident beneficiaries → conduit principle (Section 25B)
If income is vested in a South African tax-resident beneficiary during the year in which it is earned by the trust, it is taxed in the hands of the beneficiary at their applicable marginal rate — not in the trust. The income retains its nature (e.g., rental income remains rental income in the hands of the beneficiary). This is the conduit principle, partially codified in Section 25B of the Income Tax Act.
From 2024 (following the 2023 amendment to Section 25B), the conduit principle for income applies only to resident beneficiaries. Income vested in non-resident beneficiaries is no longer passed through to them — it is taxed in the trust at 45%.
Source: SARS Trust Income Tax — 2025 Season Updates; Thomson Wilks (September 2025)
Income attributed back to the donor/settlor (Section 7)
Section 7 of the Income Tax Act overrides the conduit principle (Section 25B) in specific circumstances. Where a person has donated assets to a trust but retains effective control or a financial interest in those assets, the income generated is attributed back to the donor/settlor and taxed in their hands.
This "attribution rule" prevents the tax benefit of splitting income with a trust when the donor has not truly parted with economic control.
Source: SARS Step-by-Step Guide — eTrust; MPA Meyer Attorneys; Section 7 of the Income Tax Act
Summary
| Situation | Who pays income tax? | Rate |
|---|---|---|
| Income retained in trust | The trust | 45% flat (or special trust scale) |
| Income vested in resident beneficiary | The beneficiary | At their marginal rate |
| Income vested in non-resident beneficiary (post-2023) | The trust | 45% flat |
| Donor retains control (Section 7 attribution) | The donor/settlor | At their marginal rate |
Capital gains tax (CGT) in trusts
| Trust type | CGT inclusion rate | Max effective CGT rate |
|---|---|---|
| Non-special trust | 80% | 36% (80% × 45%) |
| Special trust | 40% | 18% (40% × max marginal 45%) |
Source: SARS Budget 2026 FAQ — sars.gov.za; Crest Trust (citing SARS); MPA Meyer Attorneys (August 2025)
When a trust disposes of a capital asset, the resulting capital gain arises in the hands of the trust as the default position and is taxed at the 36% effective rate (for non-special trusts).
Source: SARS; PvdZ Consulting
Distributing CGT to resident beneficiaries — Paragraph 80 of the Eighth Schedule
Under Paragraph 80(2) of the Eighth Schedule to the Income Tax Act, if a trust disposes of an asset and vests the resulting capital gain in a South African tax-resident beneficiary in the same year of assessment, that capital gain may be taxed in the hands of the beneficiary at their individual CGT rate — which may be significantly lower than the trust rate.
- The trust must have disposed of the actual asset giving rise to the gain
- The capital gain must be vested in the beneficiary in the same year of assessment
- The beneficiary must be a South African tax resident
Thistle Trust — Constitutional Court (October 2024):
A landmark ruling with major implications for multi-tier trust structures. The Constitutional Court confirmed in The Thistle Trust v Commissioner: SARS (October 2024) that:
- Capital gains in a discretionary trust do NOT automatically flow through the conduit principle to beneficiaries in multi-tier arrangements (i.e., where the "beneficiary" is itself another trust)
- The CGT rules for trusts (Paragraph 80 of the Eighth Schedule) codify a specific rule — the common-law conduit principle does not override it
- Tiered trust structures attempting to use the conduit principle across multiple trusts to reduce CGT will not succeed
If you have a multi-tier trust structure (a trust whose beneficiary is another trust), the capital gain on disposal of assets may be taxed in the first trust at 36% — not in the ultimate human beneficiary. The ruling underscores the importance of obtaining specialist legal and tax advice on trust structures.
How to file the ITR12T — trust income tax return
The ITR12T is the annual income tax return for trusts. It is separate from the individual ITR12 and the company ITR14. All trusts registered with SARS must submit an ITR12T, including dormant trusts.
Who is responsible for submitting: The appointed representative taxpayer (typically the trustee or a registered tax practitioner acting on behalf of the trust) is responsible for submitting the ITR12T annually within the prescribed filing period.
19 January 2026 (2025 YOA)
SARS determines the filing period annually.
How to file on eFiling (6 steps)
- Log in to SARS eFiling (sarsefiling.co.za) using the trust's eFiling profile.
- Navigate to: Returns → Returns Issued → Income Tax (ITR12T/IT12TR/IT12EI).
- Select the year of assessment and click "Request Return".
- Complete the ITR12T: declare all income (retained and distributed), expenses, beneficiary information, and applicable elections (special trust, conduit principle distributions, Section 7 attributions).
- New 2025/2026 validations: New answer the wizard question on Section 25B(4)–(6) loss limitation; confirm learnership agreement dates (pre-1 April 2024 for Section 12H).
- Submit within the prescribed period.
Key disclosure requirements on the ITR12T:
- All income earned by the trust (whether retained or distributed)
- Amounts vested in or attributed to each beneficiary, with their tax reference numbers
- Section 7 attribution amounts (where applicable)
- Capital gains (Paragraph 80 distributions to beneficiaries where applicable)
- Beneficial ownership information
SARS administrative penalties for trusts — effective from 4 May 2026
Administrative non-compliance penalties under Section 211 of the Tax Administration Act, 2011 are in force from 4 May 2026 for trusts with outstanding ITR12T returns.
On 27 March 2026, SARS published a public notice listing non-submission of trust income tax returns as a non-compliance incidence subject to administrative penalties. Following stakeholder consultation indicating that trustees needed more time to regularise, the SARS Commissioner extended the penalty start date from the original date to 4 May 2026 (the first business day of May).
From 4 May 2026, SARS issues penalty assessment notices (AP34) to trusts with outstanding ITR12T returns.
Source: SARS Trusts page — sars.gov.za/businesses-and-employers/trusts/ (7 April 2026; 2 April 2026)
How the penalties work:
- Fixed-amount penalties applied to trusts that have failed to submit ITR12T returns
- Recurring monthly until the non-compliance is remedied
- Designed to escalate until compliance is achieved
- Check whether all ITR12T returns for prior years have been submitted
- If any returns are outstanding, submit immediately via eFiling
- If the trust has never been registered for income tax, register via eFiling and submit outstanding returns
- If you receive a penalty assessment notice (AP34), address the underlying non-compliance promptly
Frequently Asked Questions
Trusts (other than special trusts) are taxed at a flat rate of 45% on all taxable income retained in the trust. This has been the rate since 1 March 2017. Special trusts are taxed on the same sliding scale as natural persons, but without the primary, secondary, or tertiary rebates.
Non-special trusts have an 80% CGT inclusion rate, resulting in a maximum effective CGT rate of 36% (80% × 45% flat rate). Special trusts have a 40% inclusion rate, giving a maximum effective CGT rate of 18% — the same as individuals.
The conduit principle, partially codified in Section 25B of the Income Tax Act, allows income that is vested in a South African tax-resident beneficiary during the same year it is earned by the trust to be taxed in the hands of the beneficiary at their marginal rate — rather than in the trust at 45%. The income retains its nature (e.g., rental income remains rental income). From 2024, following the 2023 amendment to Section 25B, the conduit principle for income no longer applies to non-resident beneficiaries.
A special trust is either: (Type A) a trust created solely for a person with a disability as defined in Section 6B(1) of the Income Tax Act; or (Type B) a testamentary trust for relatives of the deceased where the youngest living beneficiary is under 18 at the time the trust terminates. Trustees must apply to a SARS branch (appointment required) for formal classification. Special trusts do not qualify for any Section 6 rebates.
Yes, under Paragraph 80(2) of the Eighth Schedule to the Income Tax Act, a trust can vest capital gains in South African tax-resident beneficiaries — who are then taxed at their individual CGT rate (up to 18% effective) rather than the trust's 36%. This requires that the trust disposed of the actual asset giving rise to the gain, and the gain must be vested in the beneficiary in the same year of assessment. The October 2024 Thistle Trust Constitutional Court judgment confirmed this mechanism does not extend to multi-tier trust arrangements (where the "beneficiary" is another trust).
The ITR12T is the annual income tax return for trusts — separate from the individual (ITR12) and company (ITR14) returns. All trusts registered with SARS must submit an ITR12T annually. The appointed representative taxpayer (trustee or tax practitioner) submits via eFiling. For the 2025 year of assessment, the final deadline was 19 January 2026. The 2026 year of assessment deadline will be announced by SARS during the 2026 filing season.
Yes. Trusts are provisional taxpayers and must submit IRP6 returns and make provisional tax payments (first payment and second payment). For trusts with a February year-end: first provisional payment is due 31 August; second is due 28 February. The 2023 amendment to Section 25B also affects IRP6 submission requirements for trusts with non-resident beneficiaries.
Section 7 of the Income Tax Act overrides Section 25B where a person donated or transferred assets to a trust but retained effective control or a financial interest in those assets. In such cases, the income generated by those assets is attributed back to the donor/settlor and taxed in their hands — not in the trust or the beneficiaries. This anti-avoidance rule prevents income splitting through trusts where the donor has not truly parted with economic control.
From 4 May 2026, SARS imposed administrative non-compliance penalties on trusts for late or non-submission of ITR12T returns under Section 211 of the Tax Administration Act, 2011. Penalties recur monthly until compliance is achieved. Trustees with outstanding returns should submit immediately via eFiling. If the trust has received a penalty assessment notice (AP34), address the underlying non-compliance urgently.
Related guides
Sources and references
All trust tax information on this page is sourced from, or verified against, the following official and authoritative references:
- Income Tax Act 58 of 1962 — Sections 7, 25B; Eighth Schedule Paragraph 80; Section 12H
- Tax Administration Act 28 of 2011 — Section 211 (administrative penalties)
- SARS — Trusts — sars.gov.za/businesses-and-employers/trusts/
- SARS — Types of Trust — sars.gov.za/businesses-and-employers/trusts/types-of-trust/
- SARS — Comprehensive Guide to the Income Tax Return for Trusts (IT-AE-36-G02) — Official Trust Guide
- SARS — Step-by-Step Guide to complete Trust return via eFiling — eFiling Trust Guide
Last reviewed May 2026 by Solly Maanaso, CA(SA). Next review: after Budget Speech February 2027 — verify trust tax rate and any legislative amendments to Sections 7, 25B, or Paragraph 80.