Trust tax compliance – IT3(t) data becomes a critical priority

Roxshanna du Toit | Head | Trusts | Tax Consulting SA | mail me |

On 8 September 2026, the South African Revenue Service (SARS) published its 2026 Trust Income Tax Season updates. The updates introduce third-party reporting data to pre-populate information on trusts’ tax returns. This stands out as one of the most significant developments for trust tax compliance.

The trust filing season opened on 19 September 2026 and closes on 22 January 2027. This applies to both provisional and non-provisional trust taxpayers.

While several changes affect the Income Tax Return for Trusts (ITR12T), one development stands out. SARS will use IT3(t) data to pre-populate information on the ITR12T. IT3(t) reporting requires trusts to report prescribed information to SARS. This includes amounts vested in beneficiaries. Until now, this process has largely operated as a separate third-party reporting obligation. SARS has used the reported data for risk assessment and analysis.

From the 2026 tax season, however, IT3(t) information will take an important step forward. The information will begin feeding directly into the trust’s own ITR12T. Ultimately, it will also feed into the information SARS uses to assess the trust and its beneficiaries.

Accuracy of IT3(t) data now even more important

In practical terms, SARS is bringing the two reporting processes closer together. SARS said the 2026 update to the trust income tax return process forms part of its service modernisation. The tax authority wants to make it easier for taxpayers to meet their obligations. It also aims to support voluntary compliance.

For the 2026 tax season, SARS has confirmed that, where IT3(t) information is available:

• Income, vested amounts and certain expense information will be pre-populated on the ITR12T to reduce duplication and improve accuracy; and
• Beneficiary schedules will be pre-populated using information reported through IT3(t).

This means that information reported to SARS during the IT3(t) reporting cycle can effectively become the starting point for completing the trust’s income tax return.

This goes beyond administrative convenience. It strengthens SARS’s ability to compare information reported across the trust and its beneficiaries. It also allows SARS to compare that information with the underlying third-party data available to it. Consequently, trustees, tax practitioners and trust administrators must pay even greater attention to the accuracy of IT3(t) submissions.

Amounts vested in beneficiaries should have support from the trust’s accounting records and appropriate trustee resolutions. The treatment ultimately reflected in the ITR12T should also remain consistent with information already reported through IT3(t).

Where these records do not align, SARS may identify the discrepancy much more easily. Importantly, the IT3(t) remains a separate reporting obligation. The 2026 IT3(t) third-party data return was due by 30 September 2026.

Section 25B comes into sharper focus

The 2026 ITR12T will also introduce new containers. These will help determine and analyse the impact of section 25B(4) – (6) of the Income Tax Act.

These provisions deal with the limitation of losses. They apply where expenses or deductions relating to trust income exceed the available income. Importantly, a trust cannot simply pass a tax loss on to a beneficiary.

Read together with the increased use of IT3(t) information, this points to greater scrutiny. SARS is likely to scrutinise amounts flowing through trusts to beneficiaries more closely. It will also examine the tax treatment applied to those amounts.

Trustees should therefore avoid treating beneficiary distributions, accounting, IT3(t) reporting and the annual income tax return as separate compliance exercises. Instead, they should treat them as parts of the same reporting chain. The underlying accounting records, trustee resolutions, IT3(t) submission and ITR12T should all tell the same story.

This integrated approach will become increasingly important for trust tax compliance. Each reporting stage can affect the information SARS receives and uses at a later stage.

Other changes trustees should take note of

SARS has announced several further enhancements for the 2026 trust tax season. Trust taxpayers will be able to amend an incorrect Master’s reference number directly on the ITR12T. However, SARS will validate the amendment against its registration information.

The existing field-length restriction will remain for now. SARS has indicated that a future enhancement will accommodate the full reference number reflected on the Letters of Authority.

Continuous-save functionality will also be introduced on the ITR12T. This means information captured while completing the return will save automatically.

Other changes include:

• Enhanced beneficial-ownership questions where a founder is a legal entity that no longer exists or a deceased natural person;
• Improved special-trust qualification questions, including confirmation that the trust continued to meet the relevant requirements during the year of assessment;
• SARS aligning the ITR12T filing process with the annual Government Notice to ensure it correctly recognises which trusts fall within the legal filing population, including all registered resident trusts and qualifying non-resident trusts required to file under that notice; and
• Mandatory tax-practitioner contact details.

Collective Investment Scheme trusts will also have the option of providing beneficial-ownership information. However, completion will not be mandatory.

What changes in practice?

It is clear that trust compliance is becoming increasingly data-driven and interconnected. Information submitted through one SARS reporting channel is no longer necessarily confined to that submission.

For the 2026 filing cycle, trustees and their advisers should pay particular attention to:

• Whether beneficiary vestings and distributions are properly supported;
• Whether trustee resolutions agree with the accounting treatment applied;
• Whether income and expenses have been correctly classified;
• Whether the IT3(t) information submitted to SARS agrees with the final accounting records; and
• Whether the ITR12T ultimately agrees with the information already reported through IT3(t).

The sequencing is important too. Errors identified only when completing the ITR12T may originate in information already reported to SARS through IT3(t).

Trustees should therefore review information before each reporting stage. This can help identify inconsistencies before they flow into subsequent submissions. It also strengthens overall trust tax compliance.

SARS is connecting the dots

While the 2026 trust tax season brings several changes, the move to use IT3(t) data to pre-populate the ITR12T is the most significant.

It shows SARS making increasingly sophisticated use of the data already at its disposal. The tax authority is connecting third-party data with the questions and information reported on the tax return. It is also applying its risk engines across these different data points.

IT3(t) should therefore no longer be approached as an isolated annual compliance exercise. It is becoming part of the broader data picture against which the trust’s tax position is reported, tested and assessed.

For trustees, this raises the importance of getting the accounting, resolutions and beneficiary reporting right before making the IT3(t) submission.

Trusts are entering a filing season where SARS already holds more of the information that will appear on the return. It is also actively using that information. The 2026 filing season is therefore about more than completing an annual return. It is also about ensuring that what is filed stands up against the information SARS already has.