BPR 431: Non-Resident Beneficiary Dividends From SA Trusts

The short answer on BPR 431 non-resident beneficiary dividends is that the tax stays with the trust. SARS ruled in BPR 431 that a South African resident trust, not the emigrated beneficiary, is the beneficial owner of a dividend vested in that beneficiary, so the trust owes dividends tax at the full 20% and no reduced treaty rate applies.

SARS published Binding Private Ruling 431, "Vesting of dividends by a resident trust in non-resident beneficiaries", on 30 October 2026, and its BPR 421 to 440 listing still marks it "New!". The ruling reverses the treaty-rate result SARS gave in BPR 377 in 2022, an approach many family trusts used for emigrated children. It also arrives while trustees are preparing ITR12T returns due by 22 January 2027.

I'm Chris Herbst, Managing Director at CH Consulting. I am a Chartered Business Accountant in Practice, CBAP (CIBA), with the Chartered Institute for Business Accountants, and a General Tax Practitioner, GTP (SAIT), with the South African Institute of Taxation. Our practice prepares ITR12 returns for South Africans who have ceased tax residence, including beneficiaries of family trusts, and we reconcile their IT3(t) vesting figures with what the trustees report to SARS.

What did SARS decide in BPR 431?

In BPR 431, SARS ruled that a South African resident trust that vests dividends in non-resident beneficiaries remains the beneficial owner of those dividends, is liable for the dividends tax, and cannot have the reduced treaty rate in section 64G(3) applied.

What were the facts in the ruling?

The applicant is a South African resident discretionary trust that holds all the shares in "Company A", a resident investment company whose portfolios earn dividends and/or interest. The income beneficiaries are non-resident natural persons named in the trust deed. They are financially dependent on the trust and receive income only if the trustees exercise their discretion in their favour.

Before Company A's next dividend, the trustees plan to resolve to give the income beneficiaries "a vested personal right to dividends declared and paid by Company A." The resolution will be "without any right of review and/or withdrawal by the Trustees", will "specify the allocation percentages of any dividend amount between the Income Beneficiaries" and will "be made valid until the end of the current financial year of the Applicant." The trustees will then give Company A the details it needs to pay the dividends directly to the beneficiaries.

What did SARS rule?

• (a) The trust is the "beneficial owner" of the dividend as defined in section 64D, "due to the application of section 25B."
• (b) "The Applicant will be liable for dividends tax in terms of section 64EA."
• (c) "Section 64G(3) will not apply."

The ruling covers sections 25B, 64D(1) (the definition of "beneficial owner"), 64EA and 64G(3) of the Income Tax Act 58 of 1962, as those sections stood at 19 August 2026. It does not mention any double tax agreement or section 7.

How long is BPR 431 valid, and who can rely on it?

BPR 431 "is valid from the date of this ruling letter, until 28 February 2027", the last day of the 2027 year of assessment, and it sets no extra conditions or assumptions. A binding private ruling binds SARS only towards its applicant. Other trusts in the same position should apply the same reading of the Act itself and consider their own ruling application where the amounts are material.

Why is the trust, not the non-resident beneficiary, the beneficial owner under BPR 431?

The trust is the beneficial owner because section 25B, as amended in 2023 and 2026, deems trust income to accrue only to a beneficiary who is a South African resident, so a non-resident beneficiary never becomes the person entitled to the benefit of the dividend.

What does section 25B say from 1 March 2026?

Section 25B(1) was substituted by section 24(1) of the Taxation Laws Amendment Act, 2026, which is Act 5 of 2026, published in GG 54448 on 1 April 2026. It deems an amount received by a resident trust to accrue to a beneficiary only where that beneficiary "is a resident and has a vested right to that amount during that year". It is "subject to the provisions of section 7(2) to (8)" and applies to years of assessment starting on or after 1 March 2026.

Section 25B(2), which deals with vesting under a trustee discretion, applies "Where a beneficiary who is a resident has acquired a vested right". It was substituted by the Taxation Laws Amendment Act 17 of 2023 with effect from 1 March 2024. SARS's Trust Legal Changes page puts the result plainly: "income vested in non-resident beneficiaries will be taxed in the trust".

Section 64D defines the beneficial owner as "the person entitled to the benefit of the dividend attaching to a share". Because the non-resident cannot be the person to whom the dividend is deemed to accrue, that person remains the trust.

Why does the treaty rate no longer apply?

SARS's FAQ on reduced rates states that "Only persons who are not South African tax residents could possibly qualify for a reduced rate of Dividends Tax". Section 64G(3) allows the lower rate only where the company holds a declaration by the beneficial owner, in the prescribed form, that a double tax agreement applies, together with a written undertaking to notify the company of any change. The beneficial owner is a resident trust, so no valid treaty declaration exists and Company A withholds 20%.

Does an irrevocable resolution or direct payment change the answer?

No. The BPR 431 facts included both an irrevocable resolution passed before the dividend was declared and payment straight from Company A to the beneficiaries, and SARS still ruled that the trust is the beneficial owner.

Does BPR 431 overrule BPR 377?

BPR 431 does not formally overrule BPR 377, because each private ruling binds only its own applicant, but it reaches the opposite result on similar facts under the amended section 25B, so BPR 377 is no longer a reliable basis for treaty-rate withholding on trust dividends.

BPR 377, dated 8 September 2022, dealt with trustees who resolved before a dividend was declared to vest dividends in beneficiaries resident in a treaty country. SARS ruled that the company "will be required to withhold dividends tax at a reduced rate as contemplated in section 64G(3)", provided the declarations and undertakings were submitted before payment. That ruling was valid "for a period of one year from 5 May 2022", before either amendment to section 25B.

• Ruling date: BPR 377 (2022): 8 September 2022; BPR 431 (2026): 30 October 2026
• Law applied: BPR 377 (2022): Before s25B amendments; BPR 431 (2026): Act as at 19 August 2026
• Beneficial owner: BPR 377 (2022): Non-resident beneficiaries; BPR 431 (2026): The resident trust
• Withholding rate: BPR 377 (2022): Reduced treaty rate; BPR 431 (2026): Full 20%
• Section 64G(3): BPR 377 (2022): Applied; BPR 431 (2026): Does not apply
• Validity: BPR 377 (2022): One year from 5 May 2022; BPR 431 (2026): To 28 February 2027
• Reliance for 2025 onwards: BPR 377 (2022): Shortfall exposure; BPR 431 (2026): Current SARS view
• Credit in home country: BPR 377 (2022): Not addressed; BPR 431 (2026): No SARS guidance

For the 2025 and later years of assessment, we advise trustees to have Company A withhold 20% and to stop relying on beneficiaries' treaty declarations.

How are BPR 431 non-resident beneficiary dividends taxed in your hands?

In South Africa, a dividend vested in you as a non-resident beneficiary is not deemed to be your income under section 25B, the dividends tax is the trust's liability, and you receive the net amount after 20% has been withheld.

Is the dividend part of your South African income?

No. Section 25B only attributes the amount to a resident beneficiary, so the dividend stays with the trust for South African purposes. SARS's Tax and Non-Residents page notes that South African-source dividends "are exempt from normal tax" (with exceptions) and that "Generally speaking, a dividend will be subject to dividends tax or normal tax, not both". Other income the trust vests in you, such as interest, is taxed in the trust at the trust rate of 45% for both the 2026 and 2027 years of assessment.

Will your new country tax the dividend again?

SARS has not published guidance on whether your country of residence must give credit for the 20% that the trust bears. Practitioners such as BDO point out that this can produce double taxation without relief. Plan on 20% South African dividends tax with no treaty reduction and no South African refund. Get advice in your home country before the trustees vest anything, and ask the trustees for a statement of dividends tax withheld per payment, in case your foreign tax authority accepts it.

Can section 7 shift the tax to a parent or donor?

Yes, where a resident person funded the trust. Section 25B(1) is subject to section 7(2) to (8), and the 2026 Act amended section 7(5) so that the person who made the disposition must be "a resident at the earlier of the accrual or receipt of that income". SARS's Trust Legal Changes page adds: "Where section 7 applies, the relevant income may continue to be taxed in the hands of the donor". BPR 431 does not deal with section 7. If a resident parent funded the trust by loan or donation, the trustees should model attribution to that parent before vesting, rather than assume the trust is the only taxpayer.

What do you declare on your ITR12 as a non-resident trust beneficiary?

You do not report a dividend that section 25B leaves taxable in the trust as your own taxable income. Where you file an ITR12 for other South African-source income, you disclose the trust and the amount in the Trust section, using the trust's tax number.

SARS has not published guidance on whether a non-resident should list a dividend that section 25B treats as taxable in the trust. Our approach is to disclose it in the Trust section without adding it to your income, so that SARS sees figures that agree with the trust's own returns.

You have other South African income, such as rent or interest

According to SARS's non-resident return FAQ, "If a non-resident receives income from a South African source, he or she may be required to submit a return." The Comprehensive Guide to the ITR12 (Revision 40) says dividends received as a trust beneficiary "must be excluded and declared separately in the Trust section of the return". From the 2025 year of assessment that question is optional and takes up to 20 trusts. Make sure the amounts agree with the IT3(t) and the trust's ITR12T.

The trust dividend is your only South African amount

The ITR12 guide states that a taxpayer who answers "No" to receiving RSA-sourced income "can submit a nil return." What decides your position is whether you have any other South African-source income. If you have none, the nil-return route fits, and you keep the trustees' vesting records on file in case SARS compares them with the IT3(t).

You ceased residence during the tax year

From the 2022 year of assessment, the cessation-of-residence fields for non-residents are "prepopulated and locked", and a taxpayer who ceased residence during the year sees both the resident and the non-resident wizards. SARS has not published guidance on dividends vested before and after the cessation date in that year. Compare the date of each vesting with your cessation date. Dividends vested while you were resident follow the resident-beneficiary rules, and those vested afterwards are taxable in the trust. Our articles on tax residency and section 9H exit tax cover the cessation itself.

What must the trustees file on the IT3(t) and ITR12T after BPR 431?

The trustees must report every amount vested in a beneficiary on the IT3(t). On the ITR12T, they must show dividends vested in foreign beneficiaries on the line "Taxable in trust (vested in foreign beneficiaries i.t.o. s25B)", not as distributions.

The IT3(t) vesting certificate

Government Notice 3631, issued under section 26 of the Tax Administration Act, requires resident trusts to report "Any amount vested in a beneficiary including income (nett of expenditure), capital gains and capital amounts". SARS's 7 September 2026 media release set the IT3(t) due date at 30 September 2026 and confirmed that SARS uses IT3(t) data to populate beneficiaries' returns and pre-populate the ITR12T. The notice itself gives 31 May. Work to the date SARS announces each year. Ask the trustees how they reported your amount and have them correct a submitted IT3(t) if needed. Our IT3(t) guide explains the certificate from the beneficiary's side.

The ITR12T lines for foreign beneficiaries

The Comprehensive Guide to the ITR12T (Revision 25, effective 21 September 2026) adds a line in each local income section, "Taxable in trust (vested in foreign beneficiaries i.t.o. s25B)", which applies from the 2025 year of assessment. The distribution lines read "(excluding amounts vested in foreign beneficiaries)". The trust season runs from 19 September 2026 to 22 January 2027. SARS's trusts page records that administrative penalties for late or missing ITR12T returns began on 4 May 2026 for tax periods from 2024 onwards. They are issued on an AP34 notice and "may recur monthly until corrected". The trust's second provisional payment for 2027 is due on 28 February 2027, which our February IRP6 guide covers.

Moving the money offshore

SARS's international transfers page states that from 16/10/2026 the Manual Letter of Compliance "includes the requirement for the resident Trust to obtain a TCS Good Standing when presenting the Manual Letter of Compliance". Unfiled ITR12T returns or unpaid dividends tax will block that status. Our TCS guide explains how compliance status is assessed.

What steps should you take after BPR 431?

As an emigrated beneficiary, you should confirm your residence status, gather the trustees' records, withdraw any treaty declaration, and file only on the basis that the dividend is taxable in the trust.

1. Confirm your residence status with SARS. Because the ITR12 cessation fields are prepopulated and locked, SARS's records must show your cessation date before you file.
2. Get the trustees' dated vesting resolutions. Ask for each resolution, the allocation percentages, Company A's dividend dates and amounts, and the dividends tax withheld on each payment.
3. Withdraw any DTD(RR) you signed for trust dividends. You gave the company a written undertaking under section 64G(3) to notify it of any change. Notify it in writing that you are not the beneficial owner of the trust's dividends.
4. Reconcile the IT3(t) with the ITR12T. The amount on your IT3(t) should agree with the trust's "Taxable in trust (vested in foreign beneficiaries i.t.o. s25B)" line, not with its distribution schedule.
5. Complete your ITR12 on the right basis. If you have other South African-source income, enter the trust's tax number and the amount in the Trust section, without adding it to your own income. If you have no other such income, answer "No" to RSA-sourced income and use the nil-return route.
6. Take advice in your new country. Give your foreign adviser the trustees' statement of dividends tax withheld before the next vesting resolution is passed.
7. Have the trustees settle their position. They should file the ITR12T by 22 January 2027, pay any dividends tax shortfall and hold TCS Good Standing before presenting an MLOC. If the amounts are material, they should consider their own binding private ruling.

What are the most common mistakes with BPR 431 non-resident beneficiary dividends?

The most common mistake is withholding at a treaty rate on the strength of a beneficiary's DTD(RR), which leaves the trust, as beneficial owner, owing the shortfall up to 20%.

Signing a DTD(RR) out of habit

Under section 64G(3), the beneficial owner makes the declaration. After BPR 431, that is the trust, and a resident trust cannot qualify for a treaty rate. As a non-resident beneficiary, you should not sign one for the trust's dividends.

Treating the payment record as proof of ownership

Company A may pay you directly, and your bank statement will show you as the recipient. The dividends tax records and the trust's returns must still show the trust as beneficial owner.

Letting the IT3(t) and ITR12T disagree

If the IT3(t) lists you with a vested dividend and the ITR12T reports the same dividend as taxable in the trust, the figures have to agree. If they don't, SARS's pre-population exposes the difference and can trigger verification.

Filing with the wrong residence status

The cessation fields are locked to SARS's records. If those records still show you as resident, your return starts from the wrong position, and your dividend could be read as income vested in a resident beneficiary.

Forgetting section 7 when a parent funded the trust

Where a resident parent lent or donated money to the trust, section 7 can attribute income to that parent. The trustees should test this before vesting, not after SARS raises it.

What does SARS already know about trust dividends vested in non-residents?

SARS already holds the trust's IT3(t) and ITR12T data, the dividend-paying company's dividends tax returns, your residence status and cross-border financial account reports, so a gap between them shows up without SARS needing to ask.

• IT3(t): every vested amount per beneficiary, used to pre-populate returns.
• ITR12T: the beneficial-ownership declaration, the foreign-beneficiary lines and the distribution schedules.
• Dividends tax returns: under the Quick Guide to Dividends Tax, these are due "on or before the end of the month following the month in which the Dividends Tax is triggered". They show the rate applied, so a reduced rate on a trust-owned dividend stands out.
• Residence records: your ITR12 cessation data.
• CRS and FATCA reports: under SARS's automatic exchange of information rules, financial institutions report each year for periods running from 1 March to the end of February. Submissions are due at the end of May, and SARS exchanges data with partner countries.

Where these sources disagree, expect a dividends tax shortfall raised on the trust rather than on you, verification of the ITR12T where it differs from the IT3(t), and AP34 penalties for late trust returns. The Quick Guide gives beneficial owners three years from the payment date to claim a refund, while a shortfall assessment can reach further back than that. An assessment the trustees disagree with goes through the objection process.

Do You Need Help With BPR 431 Trust Dividends?

If you have emigrated and remain a beneficiary of a South African family trust, we can check your residence status, reconcile your IT3(t) with the trustees' ITR12T and prepare your ITR12 on the correct basis. Book a call to go through your own facts, or email info@chconsulting.co.za with your questions.