The Shulhan Aruch (O.H. 58:1) says that the time for reciting Keriat Shema in the morning begins from when there is sufficient sunlight that one can recognize one’s close friend within four Amot. There are different opinions as to when this is, and the range is between thirty to sixty minutes before sunrise. The time for reading Shema extends till three hours into the day. The optimal time to read Keriat Shema and its blessings is a little bit before sunrise such that one can recite the Amida right at sunrise.
All agree that Shema can be fulfilled on a biblical level up until the end of the third Halachic hour (Sha’a Zmanit) of the day, however, there is a classic debate as to what the starting point of the day is. The Magen Avraham (M.A., O.H. 58:1) holds that the beginning of the day is reckoned from Alot Hashahar (dawn), the time in which the earliest rays of sunshine can be seen on the horizon. The Vilna Gaon, on the other hand, says that the day begins at sunrise. Since dawn is around seventy two minutes before sunrise, then there is a significant difference as to the latest time that one is able to fulfil the Mitzvah of Shema. The HIDA (Haim Sha’al) writes that the Sephardic custom is to follow the opinion of the Magen Avraham since this appears to be the position of the Shulhan Aruch. Rabbi Ben Zion Abba Shaul (Or Lezion, vol. II, ch. 6, § 1) concurs.
Nevertheless, Rabbi Yedidya Monsenego (Pirhe Shoshanim, § 9), Rabbi Yosef Messas (Otzar Hamichtavim, vol. III, § 1825), Rabbi Yitzhak Hazan (Yehave Da’at, vol I, § 11) and Rabbi Moshe Malka (Mikve Hamayim, vol. IV, § 8) all write that the accepted custom in Morocco was to rely on the later time of the Vilna Gaon specifically on Shabbat. That being said, since it is a biblical commandment it is praiseworthy to read Shema prior to the end of the third hour according to the Magen Avraham if one is able to. Interestingly, there is a point early in the Korbanot section of Shaharit in which Shema is recited through which one could fulfil one’s obligation . Indeed, Rabbi Baruch Toledano says that even on Shabbat when the later opinion could be relied upon, by reading the Shema in the Korbanot one has the opportunity to fulfil the commandment according to the earlier opinion.
Summary: Regarding the latest time to recite Shema in the morning, the Sephardic custom is to follow the opinion of the Magen Avraham. The Moroccan custom is that one may rely upon the time of the Vilna Gaon on Shabbat.