SARS Cracks Down on Compliance: What Trustees Need to Know

The era of administrative leniency for South African trusts is over.

On 27 March 2026, the Commissioner for the South African Revenue Service (SARS) confirmed that the failure to submit an Income Tax Return for Trusts (ITR12T) is regarded as non-compliance. Trustees were afforded an opportunity to rectify their tax affairs by 4 May 2026, after which SARS began enforcing administrative penalties against non-compliant trusts.  

The "Dormant Trust" Myth

Historically, many trustees operated under the assumption that dormant trusts, or trusts with no income or activity, did not have filing obligations. SARS has now made it clear that this is not the case.

The administrative penalties apply to all trusts registered for income tax, including active, passive, and dormant trusts from the 2024 tax year onwards. Where an outstanding ITR12T has not been submitted, SARS may issue an administrative penalty assessment.

Depending on the taxpayer's taxable income, penalties can range from R250 to R16,000 per month and may continue for up to 35 months.

While SARS may waive penalties in full or in part in limited circumstances, relief is generally reserved for exceptional and extreme circumstances that were beyond the taxpayer's control and prevented the taxpayer from complying.

More Than a Tax Issue

Trustees should not view tax compliance in isolation. Their obligations extend beyond SARS and include compliance with the Trust Property Control Act 57 of 1988. Trustees must ensure accurate beneficial ownership records are maintained and kept up to date with the Master of the High Court.

Increasing regulatory focus on transparency and anti-money laundering measures means that trusts are subject to greater scrutiny than ever before.

Where trustees administer investments, commercial property, or other significant assets, they are also bound by fiduciary duties under the Financial Institutions (Protection of Funds) Act 28 of 2001. This requires trustees to act in good faith and with the care, diligence, and skill reasonably expected of a person managing another’s affairs.

Failure to comply with statutory obligations, including tax filing requirements, may constitute a breach of these duties.

What Trustees Should Do Now

Trustees should take immediate steps to:

• Confirm that the trust's SARS registration details are correct and up to date.

• Identify and submit all outstanding tax returns for the Trust.

• Verify that beneficial ownership information is accurate and consistent with records lodged with the Master of the High Court.

• Address any outstanding tax liabilities or compliance issues without delay.

Where a trust has outlived its purpose and is to be terminated, trustees should first ensure that its tax affairs have been fully rectified before taking steps to wind up the trust.

Conclusion

The message from SARS is clear: every registered trust must comply with its tax obligations, regardless of whether it is active or dormant. Trustees who act proactively can avoid unnecessary penalties, administrative complications, and potential personal liability.

Written by: Nqobile Magwaza
Moderated and approved by: Rohula Kgabu

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