Time has run out for non-compliant trusts: from 4 May 2026, the South African Revenue Service (SARS) will impose administrative penalties on trusts with outstanding tax returns, levied monthly and potentially amounting to R16,000 per outstanding return.
Sidney Fletcher
Senior Manager: Trust and Tax Compliance
Roxshanna du Toit
Head of Trusts
On 27 March 2026, in Government Gazette Vol. 729, Issue No. 54417, SARS formally listing the non-submission of income tax returns by Trusts as an incidence of non-compliance subject to an administrative non-compliance penalty under section 211 of the Tax Administration Act, 2011 (TAA).
SARS reinforced this in a statement on 2 April 2026, noting that administrative penalties may be imposed on taxpayers who fail to comply with an obligation under a tax Act. “The penalties are designed to encourage compliance, applied consistently, and may recur monthly until corrected,” SARS states.
This publication marks a significant shift in the enforcement landscape for trusts, which has long been perceived as lenient. What was previously an administrative and progressively enforced compliance approach has now been entrenched in law, leaving little room for delay or oversight.
Trustees should act immediately. These penalties are levied monthly, ranging from R250 running into the thousands per outstanding return, depending on the circumstances. Any outstanding returns or compliance failures must be addressed without delay, as the legal framework supporting penalties is now fully in force and actively being applied by SARS.
From Intention to Binding Law
Signed off by SARS Commissioner Edward Kieswetter as per the Government Gazette, the following non-compliance event will trigger 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 now cements SARS’ earlier intentions into enforceable law, marking the end of the “warning phase” for trusts.
SARS further clarified in communication that it will issue a penalty assessment notice (AP34) to notify taxpayers of penalties levied due to non-compliance with tax return submissions. The notice will reflect the amount of penalties imposed, the tax year(s) with outstanding returns, and the steps to be followed to prevent further accumulation of penalties.
Final Demand Letters: The Point of No Return for Non-Compliant Trusts
Earlier in 2026, SARS had already begun intensifying its enforcement actions through reminder notices, final demand letters, direct engagement with trustees and tax practitioners, and increased scrutiny of outstanding trust returns.
With the Gazette now in effect, these enforcement actions carry significantly more weight. Once a final demand has been issued, failure to comply within 21 business days results in automatic administrative penalties being imposed. The rule applies to years of assessments commencing on or after 1 March 2023.
Taxpayers who do not agree with the penalties may submit a request for remission, provided they comply with the prescribed dispute resolution procedures set out in the Tax Administration Act.
Continued non-compliance may further expose trustees to escalated enforcement measures, including legal summons, potential criminal prosecution, financial penalties, or even imprisonment for up to two years.
Preparing for the New Compliance Era
With the legal framework now in force, it is advised that trustees, trust representatives, and tax practitioners must take immediate and proactive steps.
At a minimum, this includes ensuring that trusts are properly registered for all applicable tax types, verifying that all outstanding returns have been identified and submitted, and confirming that all tax reporting is accurate and complete. In addition, proper accounting records must be maintained, and any historical non-compliance must be addressed as a matter of urgency.
The era of optional compliance has ended. It is now imperative for trustees and tax practitioners to implement the necessary measures to address outstanding obligations and safeguard the trusts under their responsibility and supervision.
What was previously a proposed compliance tightening has now become enforceable law. Final demand letters are no longer procedural; they are the gateway to automatic penalties and enforcing compliance.
With penalties being levied from 4 May 2026, trustees have a window to act decisively to ensure full compliance. Failure to do so will result in measurable financial consequences and potential legal exposure.
