THE INCOME TAX RETURN FOR TRUSTS (ITR12T)

What's New?

SARS implemented several changes to the Income Tax Return for Trusts (ITR12T) form in respect of the year of assessment ending on 28 February 2017. The changes are part of SARS’s ongoing efforts to promote efficiency and compliance. If you saved or submitted your 2017 ITR12T prior to the implementation of the latest changes, none of the new fields will be presented for completion. The contents of the return are fully customisable based on answers to certain questions presented to you for completion.

Some important changes to the ITR12T include:

• Dividends deemed to be income in terms of s8E and s8EA - The introduction of a new local income type, i.e. dividends deemed to be income i.t.o. s8E and s8EA.

• Disclosure of details of Trusts / Companies / Individuals that transacted with the Trust - The ITR12T has been updated to:

• Exclude trusts that are collective investment schemes or employee share incentive schemes from having to disclose information related to details of persons that transacted with the Trust.

• Introduce additional validations for all other trusts to ensure that the income distributed by the trust to other persons (trusts / companies / individuals) is fully disclosed.

• Learnership Agreements (s12H) - The ITR12T has been updated to require a detailed schedule of all learnerships registered / entered into and learnerships completed where the trust claims a s12H deduction. This schedule requires the number of learners and the allowance amount to be completed for each field listed in the learnership schedule. The schedule requires separate disclosure for learners with a disability and learners without a disability for NQF levels 1 – 6 and NQF levels 7 – 10.

• Loan, advance or credit to a trust (s7C)

• The supporting trust participants schedule on the ITR12T has been updated to identify loans granted to the trust that are subject to the provisions of the new section 7C that was added to the Income tax Act:

• A new Section 7C has been added which makes provision for interest free or low-interest loans that are made directly or indirectly by a natural person or a company at the instance of the natural person connected to such company to a trust. A number of conditions apply, as well as certain exclusions. In essence, the difference between the amount incurred by the trust as interest and the amount that would have been incurred by that trust at the official rate of interest as defined in section 1(1) of the Income Tax Act, No 58 of 1962 (as amended) (“the Act”) will be treated as having been donated by the natural person to the trust and will therefore be subject to donation tax in terms of section 54 of the Act. The natural person may use the annual donations tax exemption of R100 000 (or the remaining portion if applicable) against this deemed donation.

• The section 7C donation is deemed to be a continuing annual donation for purposes of donations tax and deemed to be made by the natural person on the last day of the year of assessment of the trust which is generally the last day of February. It is important to note that in terms of section 60(1) of the Act, donations tax is payable by the end of the month following the month during which a donation takes effect or such longer time as SARS may allow. Therefore, in almost all section 7C deemed donations, the donations tax payments must occur by the end of March.