IT3(t) declarations: What you need to know

Kliek hier vir AFRIKAANS

The South African Revenue Service (SARS) has introduced the new IT3(t) submission requirements as part of its ongoing efforts to enhance transparency and improve tax compliance, particularly within the trust environment. These requirements are designed to address gaps in the reporting of certain financial information, especially those related to distributions to beneficiaries.

What is IT3(t) and why is it important?

The IT3(t) is a tax declaration specifically designed for trusts. It requires the reporting of financial information related to distributions, income, and other transactions to ensure accurate and transparent tax reporting. Introduced by SARS to close gaps in trust-related income reporting, IT3(t) declarations are crucial for ensuring that all income and distributions are properly accounted for. This supports accurate income tax assessments and aids SARS in identifying discrepancies or omissions in trust-related financial reporting, ultimately bolstering their revenue collection efforts.

Who is affected?

The requirement to submit IT3(t) declarations applies to all trusts registered with SARS. Trustees, as the legal representatives of the trust, are responsible for ensuring these declarations are submitted. This responsibility also extends to any person or entity acting as an administrator or manager of a trust’s financial affairs.

Key deadlines

For the 2024 tax season, IT3(t) declarations must be submitted to SARS by
30 September 2024. It is important to note that the submission deadlines for future financial years may become more stringent.

Practical considerations for compliance

Trustees must ensure that the financial records of the trust are properly maintained on a continuous basis, as the financial information will need to be readily available to meet the necessary reporting requirements. This represents a significant shift from the previous practice, where many trusts only prepared annual financial statements without necessarily maintaining accounting records continuously.

Trustees might consider implementing or updating trust administration systems to streamline the collection and reporting of financial data.

It is essential to ensure that your trust meets these requirements to avoid potential penalties and unnecessary tax liabilities, particularly if the trust’s taxable income is distributed to beneficiaries.

IT3(t) declarations are submitted via eFiling and the IT3 functionality must be activated on your trust’s eFiling profile before the relevant submissions can be made. It is crucial that the trust’s registered details with SARS are up to date and that a “main trustee” is appointed, as a One Time PIN (OTP) will be sent to the main trustee, which is required to activate the IT3 functionality.

In instances where registered details are outdated or a main trustee has not yet been appointed, it may be necessary to schedule an appointment with SARS to update the relevant information.

Conclusion

Trustees must take proactive steps to comply with this obligation, ensuring that their trusts meet SARS’s reporting standards and avoid potential penalties. Staying informed and prepared will be key to successfully navigating these new requirements.

We are available to assist taxpayers with the preparation and submission of the relevant IT3(t) declarations to SARS. You are welcome to contact us at tax@asl.co.za if you require additional information.