What this page covers
A trust pays the highest flat rate in the system, but income distributed to a beneficiary in the same year is taxed in that person's hands instead. The difference between those two outcomes is most of trust planning.
| Item | Trust | Individual, top bracket | Company |
|---|---|---|---|
| Income tax rate | 45% | 45% | 27% |
| CGT inclusion rate | 80% | 40% | 80% |
| Effective CGT rate | 36% | 18% | 21.6% |
| Annual CGT exclusion | None | R50,000 | None |
| Interest exemption | None | R23,800 | None |
| Situation | Taxed in the hands of |
|---|---|
| Income distributed to a resident beneficiary in the same year | The beneficiary, at their rate |
| Income retained in the trust | The trust, at 45% |
| Income from assets donated by a living donor | The donor, under attribution |
| Income of a special trust for a disabled person | At individual rates |
| Capital gain distributed in the same year | The beneficiary, at their inclusion rate |
| Item | Rule |
|---|---|
| What it targets | An interest-free or low-interest loan to a trust |
| Deemed donation | The shortfall against the official rate of interest |
| Official rate | 8.25% |
| Donations tax | 20% on the deemed donation above the annual exemption |
| Annual donations exemption | R150,000 for a natural person |
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Every table on this page as a spreadsheet, with the source and the date it was checked in the header rows.
⬇ Download CSVHow these figures work
The figures on this page come from the body that publishes them and change on a schedule rather than continuously, which is what makes them worth keeping in one place. A trust is rarely a tax saving on its own. Its value is in estate planning and asset protection, and the 45% rate is the price of leaving income inside it.
The conduit principle only works for income vested in a beneficiary in the same tax year it arises. Vest it late and the trust pays.
★ What this means in practice
Budget 2026 announced no changes to the taxation of trusts.
✕ Common mistakes
- A trust is rarely a tax saving on its own. A trust is rarely a tax saving on its own. Its value is in estate planning and asset protection, and the 45% rate is the price of leaving income inside it.
- The conduit principle only works for income vested in a beneficiary in t. The conduit principle only works for income vested in a beneficiary in the same tax year it arises. Vest it late and the trust pays.
- Budget 2026 announced no changes to the taxation of trusts. Budget 2026 announced no changes to the taxation of trusts.
- Taking a figure without its date. A number from a reference page is only as good as when it was last checked, which is why the date sits at the top of this one.
Notes on reading these figures
- A trust is rarely a tax saving on its own. Its value is in estate planning and asset protection, and the 45% rate is the price of leaving income inside it.
- The conduit principle only works for income vested in a beneficiary in the same tax year it arises. Vest it late and the trust pays.
- Budget 2026 announced no changes to the taxation of trusts.
To put these figures to work, The Company Tax Rates Reference runs the arithmetic on your own numbers; Capital Gains Tax Rates and Exclusions covers the same ground in ordinary language; Estate Duty and Donations Tax goes into the detail this table only summarises; Estate Duty Calculator is the related figure worth reading beside it; and Trading through a company covers what this page leaves out.
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Frequently asked questions
Why is the trust rate so high?
45% is deliberate. It removes any incentive to leave income in a trust rather than distribute it, which is what the conduit principle is designed to encourage.
How does the conduit principle work?
Income vested in a resident beneficiary in the same tax year it arises is taxed in that person's hands at their rate, not in the trust.
What is section 7C?
It deems a donation where you lend money to a trust at below the official rate of interest, currently 8.25%. The shortfall attracts donations tax.
Is a trust a tax saving?
Rarely on its own. Its value is in estate planning and asset protection, and 45% is the price of that structure.
What is the CGT position?
A trust includes 80% of a gain against an individual's 40%, giving an effective 36% against 18%.
Did Budget 2026 change trust taxation?
No changes to the taxation of trusts were announced.