Compliance
Faithful Filings: Navigating Ring-fencing of Losses & Trust Tax Updates in SA’s 2026 Assessment Year
Ring-fencing of certain loss claims and changes to trust-related filings may trip up taxpayers this season — here’s what’s new, who’s affected, and how to stay compliant.
By NomadicTax Research Team • 5-8 min read • September 9, 2026
## Adjustments to Ring-fencing Losses (Section 20A)
- For years of assessment **commencing on or after 1 March 2026**, SARS has amended **section 20A** to apply ring-fencing of losses from “suspect trades” to any taxpayer subject to the **39% marginal tax rate**, compared with the previous 45% rate. ([sars.gov.za](https://www.sars.gov.za/legal-lprep-draft-2025-21a-draft-explanatory-memorandum-on-the-draft-taxation-laws-amendment-bill-2025-16-august-2025_/?utm_source=openai))
- **Suspect trades** are business activities where losses are consistently claimed to offset other income, without genuine commercial prospects of profit. This change aims to limit loss relief abuse.
## Trust-Related Filing Changes
- The trust income tax return (ITR12T) process changes for the 2026 season include:
• **31 August 2026**: first provisional tax payment due for the 2027 assessment year. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/trusts/trust-legal-changes/?utm_source=openai))
• **19 September 2026**: opening date for filing trust returns. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/trusts/trust-legal-changes/?utm_source=openai))
• **30 September 2026**: deadline for IT3(t) return submissions and top-up provisional payment for trusts. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/trusts/trust-legal-changes/?utm_source=openai))
• Final deadline for trust returns (provisional & non-provisional) is **22 January 2027**. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/trusts/trust-legal-changes/?utm_source=openai))
- Amendment clarifies “representative taxpayer” definition: trustees or administrators of insolvent estates are responsible for income received or accrued to insolvent estates before sequestration. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/trusts/trust-legal-changes/?utm_source=openai))
## Who Is Affected
- Individuals or entities involved in **suspect trades** earning taxable income at or above the 39% marginal rate (down from previous 45%) will face tighter loss-offset limits.
- Trusts and their appointed representatives must track filing windows closely, align data for IT3(t) returns, and ensure any insolvency estate income is properly reported.
## How to Stay On The Right Side
- Review your historical loss claims; if consistently in loss, check if they will be impacted by ring-fencing rules. If yes, reconsider business activities or restructure if possible.
- Trusts: ensure you have all trust-income, deductions, and statements in order well before peaks in deadlines.
- Represent trustees of insolvent estates: consult with legal/tax professional to understand income treatment before and after sequestration.
## Practical Example
**Scenario:** An individual runs a veterinary clinic (suspect trade) generating consistent losses, but earns other business income subject to 39% marginal tax. Under the revised section 20A (from 1 March 2026), they can no longer offset those losses against their higher proper income if their taxable income falls in that bracket.
**Trust Example:** A trustee of an insolvent estate now must include income generated before sequestration in the trust’s taxable income, because the definition of representative taxpayer has been clarified.
**Calendared Key Trust Dates:**
| Date | Event |
|---|---|
| 31 Aug 2026 | First provisional trust payment for 2027 assessment year |
| 19 Sept 2026 | Trust return ITR12T filing opens |
| 30 Sept 2026 | IT3(t) submission and top-up payment |
| 22 Jan 2027 | Final deadline for trust returns |
**Takeaway:** These changes tighten loss usage and sharpen trust-reporting obligations. Early planning and timely submission are essential to avoid penalties and loss of deductions.