New SARS IT3(t) Requirements: What South African Trustees Need to Know

In a move that aims to enhance transparency and improve tax compliance, the South African Revenue Service (SARS) has introduced new IT3(t) submission requirements for trustees. Effective from September 2023, these changes mandate trustees to provide detailed financial information, thus impacting  various kinds of trusts ranging from family and investment trusts to charitable and employee trusts.

 

Understanding the IT3(t) Submission

The IT3(t) is a tax directive that requires trustees to submit detailed information about the financial activities within a trust. This includes income, capital gains, distributions to beneficiaries and other relevant financial data. The goal is to ensure that all taxable events within a trust are accurately reported, thereby reducing the potential for tax evasion and enhancing overall tax compliance.

 

Key Implications for Trustees

1. Enhanced Compliance Requirements: Trustees must now ensure that they maintain meticulous records of all financial transactions within the trust. This involves not only tracking income and distributions but also any capital gains or losses, as well as other taxable events.

2. Increased Administrative Burden: The new requirements will likely increase the administrative workload for trustees. Detailed financial reporting demands more time and resources, potentially necessitating additional accounting support or software solutions to manage the increased complexity.

3. Greater Scrutiny from SARS: With the introduction of the IT3(t) submissions, trustees can expect greater scrutiny from SARS. This means that any discrepancies or omissions in the reported information could result in penalties or additional investigations.

 

Requirements for IT3(t) Submissions

Trustees must adhere to several specific requirements to comply with the new IT3(t) regulations:

1. Accurate Record-Keeping: Trustees are required to keep comprehensive records of all financial activities within the trust. This includes detailed logs of income, expenses, distributions, and any other relevant financial transactions.

2. Timely Submissions: The IT3(t) forms must be submitted within the specified deadlines. Trustees should familiarize themselves with the SARS submission calendar to avoid any late submissions, which could result in penalties.

3. Detailed Reporting: The information provided in the IT3(t) submissions must be detailed and accurate. Trustees should ensure that all financial data is thoroughly reviewed and verified before submission to prevent any errors or omissions.

Deadlines and Penalties

Trusts must submit their IT3(t) forms by the September deadline every year. To prevent penalties, trustees need to make sure that they provide all the necessary information by this date.

Preparing for Compliance

To ensure compliance with the new IT3(t) requirements, trustees should take the following steps:

1. Review and Update Records: Conduct a thorough review of all financial records related to the trust. Ensure that all transactions are accurately recorded and that any discrepancies are resolved.

2. Consult with Professionals: Engage with tax advisors, accountants, or legal professionals who are familiar with the new IT3(t) requirements. Their expertise can help ensure that all submissions are accurate and compliant with SARS regulations.

3. Implement Technology Solutions: Consider investing in accounting software or other technology solutions that can streamline the record-keeping and reporting processes. These tools can help reduce the administrative burden and improve the accuracy of submissions.

4. Stay Informed: Keep up-to-date with any further announcements or updates from SARS regarding the IT3(t) requirements.

Conclusion

The new IT3(t) submission requirements introduced by SARS represent a significant change for trustees managing trusts in South Africa. By understanding the implications, adhering to the detailed requirements, and preparing adequately, trustees can ensure compliance and avoid potential penalties. As always, professional advice and meticulous record-keeping are essential to navigating these new regulations successfully.

Please note that the above is for information purposes only and does not constitute tax/financial advice. As everyone’s personal circumstances vary, we recommend they seek advice on the matter. While every effort is made to ensure accuracy, Nexia SAB&T does not accept responsibility for any inaccuracies or errors contained herein.

Article prepared by: Stefan Diederiks CA(SA)

Entrepreneurial Business Services Director, Registered Tax Practitioner

For any queries or further information, please contact:

•           Hassen Kajie

Entrepreneurial Business Services Director

M: (+27) 82 333 3389 | E: hassen@nexia-sabt.co.za 

•           Yousuf Hassen

Entrepreneurial Business Services Director

M: (+27) 82 333 3376 | E: yhassen@nexia-sabt.co.za 

Source: The South African Revenue Services

www.sars.gov.za