By Chris Herbst, Chartered Business Accountant in Practice (CBAP) with CIBA, General Tax Practitioner (GTP) with SAIT, Stellenbosch University. Team registered with SAIT, SAIPA and CIBA.
Every year a number of salary earners open their ITR12 and find a capital gain or a capital loss they did not expect. It almost always comes from an IT3(c): the certificate your unit trust manager, investment platform or broker sends SARS when you sell or switch an investment. This guide explains what the certificate shows, how SARS uses it, and how to check it before you file.
What is an IT3(c) certificate?
An IT3(c) is the SARS certificate that reports the disposal of unit trusts or other financial instruments. SARS lists it on its IT3 data submission page as the "Certificate of Income re Disposal of Unit Trusts or other Financial Instruments", and its third-party data submission platform describes the IT3(c) as the data on the "disposal of financial instruments".
Who issues an IT3(c)?
Financial institutions that hold investments for you issue it. SARS names collective investment schemes, long-term insurers and other financial institutions among the third parties that submit this data. In practice the certificate arrives from the company that administers your unit trusts or holds your share portfolio, usually with your annual tax pack.
What does the IT3(c) report?
The SARS Business Requirements Specification for IT3 data sets out what an IT3(c) carries: the proceeds from the sale of unit trusts, the proceeds from the sale of other financial instruments, and the disposal of unit trusts or other financial instruments. Each record carries a base cost, the proceeds and the resulting gain or loss.
Is an IT3(c) the same as an IT3(b)?
No. The IT3(b) certificate reports interest and dividends you earned while you held an investment. The IT3(c) reports what happened when you sold or switched it. A single investment account can produce both in the same year.
What do the IT3(c) source codes mean?
The IT3(c) uses five source codes, listed in Appendix C of the SARS IT3 specification. The code tells you whether the figure is a gain or a loss, and whether it is local or foreign.
- 4250: What it reports: Local gain; Where it lands: Local capital gain
- 4251: What it reports: Local loss; Where it lands: Local capital loss
- 4252: What it reports: Foreign gain; Where it lands: Foreign capital gain
- 4253: What it reports: Foreign loss; Where it lands: Foreign capital loss
- 4114: What it reports: Foreign tax credit on gains; Where it lands: Foreign tax credit
Why does my IT3(c) show a foreign gain on a South African fund?
Codes 4252 and 4253 follow the investment, not the platform. If a local platform holds a foreign-listed fund or offshore shares for you, the disposal is reported as foreign. Foreign dividends and interest on the same holdings appear separately under the codes explained in our guide to SARS codes 4216 and 4218.
What is code 4114 on an IT3(c)?
Code 4114 is the foreign tax credit on gains: foreign tax that was withheld on a foreign disposal. It is reported so that the credit can be considered against the South African tax on the same gain.
How does SARS use your IT3(c) on the ITR12?
SARS uses third-party data to prefill your return. Its third-party data page states that SARS uses this data "to pre-populate individual tax returns, verify the accuracy of taxpayer submissions, and identify any discrepancies or risks". When your IT3(c) has reached SARS, the gain or loss usually appears in the capital gains section of your ITR12 before you type anything.
When does SARS receive the IT3(c)?
Third parties submit full-year data for the tax year (1 March to the end of February) between 1 April and 31 May each year, according to the SARS third-party data platform. Data for the first half of the year (1 March to 31 August) is submitted between 1 September and 31 October. A certificate that has not reached SARS will not appear on your return, but the disposal still has to be declared.
Why is the capital gain on my ITR12 different from my statement?
The prefilled figure is the institution's gain or loss for each disposal it reported. Your statement can show a different "growth" figure because it measures market value movement, not disposals. If you hold investments with more than one provider, each sends its own IT3(c) and the totals are added together. Read the certificate, not the statement, when you check the figure.
How is the IT3(c) gain taxed?
A capital gain on an IT3(c) is taxed through the capital gains tax rules in the Eighth Schedule to the Income Tax Act. Your capital gains and losses for the year are added together, the annual exclusion is deducted, and 40% of the remaining net capital gain is added to your taxable income. SARS sets out the 40% inclusion rate for natural persons, and the SARS capital gains tax rates page gives the maximum effective rate for individuals as 18%.
What is the annual exclusion for the 2026 tax year?
For individuals, SARS lists the annual exclusion as R40 000 for the 2017 to 2026 years of assessment and R50 000 for the 2027 year of assessment. The ITR12 for the 2026 year (1 March 2025 to 28 February 2026) therefore uses R40 000. In the year of death the exclusion is R300 000 for 2026 and R440 000 for 2027.
Does a capital loss on an IT3(c) help me?
Yes. A loss reported under code 4251 or 4253 reduces your other capital gains for the same year. A net loss after the annual exclusion is carried forward as an assessed capital loss to the next year, as the SARS Comprehensive Guide to Capital Gains Tax illustrates in its worked examples. Our guide to capital gains tax in South Africa walks through the same calculation for property.
Is every IT3(c) gain a capital gain?
The IT3(c) reports a gain or a loss. It does not decide whether that gain is capital or revenue in nature. That character is decided on your own facts, and SARS weighs them: your intention when you bought the investment, how long you held it, how often you buy and sell, and how the activity is run. A revenue gain is taxed in full as income rather than through the 40% inclusion.
What does section 9C of the Income Tax Act say about shares?
Section 9C deems the proceeds on an equity share held for at least three years to be of a capital nature, as the SARS Comprehensive Guide to Capital Gains Tax explains. For equity shares sold within three years, and for other instruments, the general tests above apply.
Who decides the character of the gain?
You do, on your return, on your own facts, and SARS can examine those facts. A registered tax practitioner sets out the tests against your history before the return is filed so that the position on the return is supported by your records.
How is the base cost on an IT3(c) worked out?
The base cost on the certificate is the institution's figure for what the units you disposed of cost you. Where you bought units at different times and prices, it has to decide which units were sold. The Eighth Schedule allows three methods for identical assets: specific identification, first-in-first-out and weighted average.
Can I use the weighted average method on unit trusts?
Yes. Paragraph 32(3A) of the Eighth Schedule allows the weighted average method for certain classes of identical assets, including financial instruments listed on a recognised exchange and participatory interests in collective investment schemes. The SARS CGT guide adds a consistency rule: once you use the weighted average method for one group of identical assets in a class, you use it for all other groups in that class.
Is switching between unit trust classes a disposal?
A switch from one fee class to another within the same unit trust portfolio is not regarded as a disposal, according to the SARS CGT guide, because investors in each class hold an equal share in the same fund assets. A switch out of one fund and into a different fund is a sale of the first fund's units, which is why many investors receive an IT3(c) in a year in which they withdrew nothing.
Are tax free investment gains on the IT3(c)?
No. The SARS IT3 specification states that gains and losses on tax free investments are not reflected on the IT3(c); the IT3(s) is used instead. Our guide to the IT3(s) certificate covers how those appear on your ITR12.
What are the steps to declare an IT3(c) on your ITR12?
The steps below follow the order of the return on SARS eFiling.
- Collect every IT3(c). Download the tax certificate from each unit trust manager, platform and broker for the 2026 tax year. Our documents checklist lists the rest of what the ITR12 needs.
- Open the ITR12 on eFiling. Go to Returns, choose the Income Tax Return (ITR12) for the 2026 year and open the return wizard.
- Answer the capital gains question. Confirm on the wizard that you disposed of assets during the year, so that the capital gain or loss section shows on the return.
- Check the prefilled figures. Compare the local and foreign gains and losses on the return with codes 4250 to 4253 on your certificates, provider by provider.
- Add what is missing. Disposals that no certificate covers, such as shares held directly or crypto assets, are added by you. No third party reports them for you.
- Keep the working. Save the certificates and the base cost records. If SARS opens a verification, these are the documents it asks for.
- Read the assessment. After filing, check the capital gain lines on your ITA34. Our guide to the ITA34 shows where they appear.
What are the common mistakes with an IT3(c)?
Ignoring a certificate because no money was withdrawn
A switch between funds, a rebalancing by a model portfolio or a fund merger can create a disposal without any cash reaching your bank account. The certificate reflects that, and so does the prefilled return.
Declaring the same gain twice
Where the gain is already prefilled from the IT3(c), typing it in again as a separate entry doubles it. Check the prefilled lines first, then add only disposals that no certificate covers.
Accepting a wrong base cost
If you moved an investment from another provider, the new provider may hold an incomplete purchase history and report too low a base cost. The gain on the certificate is then too high. Ask the issuer to correct its records; SARS notes that third-party submissions can be revised on the channel originally used.
Forgetting the foreign codes
Codes 4252 and 4253 belong in the foreign capital gain lines. Mixing them into the local figures changes how a foreign tax credit under code 4114 can be considered.
Assuming the certificate settles the character of the gain
The certificate reports a figure. Whether that figure is capital or revenue is a question of your facts, as set out above, and frequent traders in particular take that question to a practitioner before filing.
Expecting a certificate for crypto
Crypto platforms do not issue IT3(c) certificates for crypto disposals, as we explain in our guide on why crypto platforms do not supply IT3(b) and IT3(c) forms. You calculate and declare those disposals yourself.
What happens if the IT3(c) figure on my return is wrong?
You are responsible for the figures on your return, prefilled or not. Where the institution's figure is wrong, ask it to correct and resubmit the certificate, and keep its correspondence. Where your return has already been assessed on a wrong figure, a correction is made through a corrected return or, where the assessment itself is disputed, through a notice of objection.
Can SARS change my return using IT3(c) data?
SARS uses third-party data to verify returns and identify discrepancies. A return that leaves out a disposal that a certificate reported is the kind of difference that leads to a verification or an additional assessment.
Do You Need Help With IT3(c)?
We check every IT3(c) against your investment records, confirm the base cost, place each code in the right section and file your ITR12 with the working kept for SARS. Investment income is covered on our personal tax plans, and more guides sit under personal tax. Contact us to book a call.
