Sidney Fletcher | Senior Manager | Trust Tax Compliance | Tax Consulting SA | mail me |
Time has run out for non-compliant trusts. Since 4 May 2026, the South African Revenue Service (SARS) has imposed administrative penalties on trusts with outstanding tax returns. SARS levies these penalties monthly. In some cases, penalties may reach R16,000 per outstanding return.
On 27 March 2026, SARS formally listed the non-submission of trust income tax returns as non-compliance. The announcement appeared in Government Gazette Vol. 729, Issue No. 54417. SARS linked this requirement to section 211 of the Tax Administration Act, 2011 (TAA).
Penalties are now binding by law
SARS reinforced this position in a statement issued on 2 April 2026. The revenue authority noted that taxpayers who fail to comply with obligations under a tax Act may face administrative penalties. SARS also explained that penalties aim to encourage compliance. In addition, SARS stated that penalties apply consistently and may recur monthly until taxpayers correct the issue. This publication marks a major shift in the enforcement environment for trusts.
Previously, many viewed trust compliance enforcement as lenient. However, SARS has now entrenched these measures in law. Consequently, trustees now have little room for delay or oversight. The new trust tax penalties enforcement framework, therefore, changes how trustees must approach compliance obligations.
Trustees should already have taken action. SARS now levies penalties monthly. These penalties range from R250 to thousands of rand per outstanding return, depending on the circumstances. Trustees must therefore address all outstanding returns and compliance failures immediately. The legal framework supporting these penalties is now fully active and enforceable.
From intention to binding law
SARS Commissioner Edward Kieswetter signed off on the Government Gazette notice. According to the Gazette, the following non-compliance event triggers penalties:
Failure by a trust to submit an income tax return as and when required under the Income Tax Act, for years of assessment commencing on or after 1 March 2023, where SARS has issued that trust with a final demand, referring to this notice and requiring the submission of the outstanding income tax return and the trust failed to submit the return within 21 business days of the date of issue of the final demand.
Critically, the notice transformed SARS’ earlier intentions into enforceable law. As a result, the “warning phase” for trusts has officially ended. Trust tax penalties enforcement now carries direct legal consequences for trustees who ignore SARS notices.
SARS also clarified additional enforcement procedures in its communications. The revenue authority issues a penalty assessment notice (AP34) to notify taxpayers about penalties linked to outstanding tax return submissions.
The notice reflects the total penalties imposed. It also identifies the tax years with outstanding returns. In addition, it outlines the steps required to prevent further penalties from accumulating.
Final demand letters – the point of no return
Earlier in 2026, SARS intensified enforcement actions. These actions included reminder notices, final demand letters, direct engagement with trustees and tax practitioners, and increased scrutiny of outstanding trust returns.
Now that the Gazette is in effect, these enforcement actions carry greater legal weight. Once SARS issues a final demand, trusts have 21 business days to comply. Failure to comply within this period results in automatic administrative penalties.
The rule applies to years of assessment beginning on or after 1 March 2023. Trust tax penalties enforcement therefore applies broadly across recent tax years. Taxpayers who disagree with penalties may submit a request for remission. However, they must follow the dispute resolution procedures prescribed under the Tax Administration Act. Continued non-compliance may expose trustees to more severe enforcement measures.
These measures include legal summons, criminal prosecution, financial penalties and imprisonment of up to two years.
Preparing for the new compliance era
With the legal framework now active, trustees, trust representatives, and tax practitioners must act proactively and immediately.
At a minimum, trusts must register correctly for all applicable tax types. Trustees must also identify and submit all outstanding returns. In addition, they must confirm that tax reporting remains accurate and complete. Trustees must also maintain proper accounting records. Furthermore, they must address all historical non-compliance urgently. Effective trust tax penalties enforcement now requires stronger internal compliance systems and proactive oversight.
The era of optional compliance has ended. Trustees and tax practitioners must now implement measures that address outstanding obligations and protect the trusts under their supervision. What previously appeared as proposed compliance tightening has now become enforceable law. Final demand letters no longer serve as procedural warnings. Instead, they now trigger automatic penalties and formal compliance enforcement.
Since penalties began applying on 4 May 2026, trustees have faced increasing financial and legal exposure for unresolved non-compliance.