The South African Revenue Service is aware of various non-registered trusts that are so-called dormant or where no income producing activities are carried out, but that own assets, for example, shares in business entities, primary residences, lifestyle assets or vacant land.  SARS is also aware of the fact that many trusts are not preparing financial statements, for example, in which assets and related settlements, donations, or dispositions by individuals are disclosed.

Paragraph 2 of the Schedule to Notice 3540 published in the Government Gazette on 14 June 2023 deals with persons who have to submit income tax returns.

Paragraph 2(b) requires every trust that was a resident during the 2023 year of assessment to submit a return.  The trust’s economic activity or state of dormancy has no bearing on the requirement to submit a return.  The only requirement is that the trust is a resident.

A further important change to the Income Tax Return for trusts with effect from 23 June 2023 is that a simplified return for passive trusts was introduced which entails a less cumbersome return where limited trust specific activities occurred during the year of assessment, so called passive trusts with no economic activity, including “dormant trusts”.

Therefore, should you act as trustee, business advisor or render any other professional service to any trust or related party, be sure to comply to avoid further action.

Should you need assistance with the registration of your trust for income tax purposes, or just to update the long overdue financial statements for your trust, you are welcome to contact Theresa Tannous at Millers Inc George.