South African trusts and trustees are entering a far more unforgiving tax enforcement environment. The South African Revenue Service (Sars) has shifted from a lenient approach to a more formalised and assertive regime of administrative non‑compliance penalties under the Tax Administration Act No. 28 of 2011 (TAA). 

Besides sending reminders and warning trusts to meet tax return submission deadlines, the tax authority has since December 2025 started telephonically contacting trustees, tax representatives and tax practitioners of trusts with outstanding returns, to remind them to submit immediately. 

On 3 February 2026, Sars began its first roll-out of final demand letters, in terms of the TAA, clearly signalling that failure to meet trust tax obligations will now carry measurable consequences for trustees.

From Years of Warnings to Concrete Action

The Act empowers Sars to issue public notices specifying incidents of tax non‑compliance that attract fixed administrative penalties, and to impose these penalties when taxpayers fail to comply.

Historically, Sars most consistently applied these penalties to individuals and companies for late or non‑submission of tax returns. Trusts, in contrast, often received warnings or were encouraged to voluntarily regularise their affairs rather than being penalised. 

This enforcement landscape is now changing significantly!

On 3 December 2025, Sars published a draft public notice proposing the imposition of administrative penalties on trusts that fail to submit outstanding returns. The notice remained open for public comment until 28 January 2026.

Over late 2025 and into early 2026, we have seen in practice how Sars has stepped up its focus on trust tax compliance by issuing official reminders to trustees and tax practitioners about the 2024/25 trust filing season deadline, emphasising that all trusts must meet submission deadlines, warning that non-compliance can attract penalties and enforcement action and contacting those with outstanding returns. 

Final Demand Letters: The Point of No Return for Non-Compliant Trusts

With issuing final demand letters, Sars sends a clear message to trustees that there is no turning back. Sars grants the trusts 21 business days to file the outstanding returns as indicated on the letter. Failure to do so will result in administrative penalties being imposed monthly, per return ranging from R250 up to R16,000. 

Further non-compliance could result in summons being issued, and/or criminal prosecution which upon conviction is subject to a fine or to imprisonment for a period of up to two years, as per the example below.

These communications form part of Sars’s strategy to enforce compliance trust sector, ahead of anticipated administrative non-compliance penalties.

Filing Obligations of Trusts That Can Cause Non-Compliance

Every trust, whether active, dormant, passive, or of negligible activity, must register for tax with Sars and submit annual income tax returns (ITR12T). Sars has emphasised that being “dormant” does not exempt a trust from filing. 

Trustees have a statutory obligation to ensure that the trust complies fully with all tax requirements. This responsibility includes submitting returns within the prescribed deadlines, preparing accurate and complete financial information, and maintaining comprehensive, reliable records to support all disclosures made to Sars.

The list of mandatory submissions includes, but are not limited to:

• ITR12T – Annual Income Tax Return submission
• IT3(t) – Third-Party Data Return for Trusts  
• IRP6 – Provisional Tax Return (If Trust Is a Provisional Taxpayer or is required to be one)

Other Sars returns submissions can include VAT201 (for Trusts that are VAT registered) and EMP201 and EMP501 – Employees Tax Returns (for Trusts that employ staff).

Preparing for the New Compliance Era

While the draft public notice is primarily directed at the submission of annual income tax returns, its scope is broader—ultimately applying to any trust that fails to submit returns when required and due. 

Trustees cannot afford to take their responsibilities lightly. Proactive measures to address non-compliance may include:

• Confirming that the trust is correctly registered for all relevant Sars tax types
• Filing any outstanding returns without delay
• Implementing robust IT3(t) third‑party reporting processes
• Ensuring the trust’s accounting, administration, and record‑keeping comply with statutory and Sars requirements
• Addressing historic non‑compliance before the penalty regime is finalised and implemented.

This approach reduces the risk of penalties and positions the trust for smooth compliance going forward.

Conclusion

Although the draft public notice has not yet been formally finalised, Sars’ direction is clear: trusts are firmly on the compliance radar, and non‑compliance will carry financial consequences. 

As Sars has already taken the first steps toward enforcing compliance ahead of the anticipated implementation of administrative penalties, trustees should act without delay to ensure all returns are up to date and that administrative processes align with Sars’ expectations. 

Taking early action will help avoid unnecessary penalties and safeguard the trust against escalating enforcement measures.

Written by Sohail Arnoldus, Senior Tax Consultant at Tax Consulting SA