SARS Is Back: Trusts With Outstanding Returns Face Penalties of Up to R16,000 a Month
The South African Revenue Service (SARS) has started issuing final demand notices to trusts with outstanding income tax returns, ending the temporary relief granted earlier this year. According to Tax Consulting SA, trustees who haven’t filed should act now, because penalties can reach R16,000 per month.
How we got here
In February 2026, SARS sent final demand letters to trusts with outstanding income tax returns, giving each one 21 days to comply. If a trust doesn’t meet its filing requirements, SARS can impose administrative penalties of R250 to R16,000 per month.
Then the process hit a snag. To impose administrative penalties, SARS must have a public notice that identifies the relevant non-compliance. The final demand letters went out in February, but the related public notice was only published on 27 March. That raised questions about whether demands issued before the notice could be relied on.
After several stakeholder engagements, SARS chose to defer the penalties. On 6 July 2026, it issued a notice cancelling penalties for trusts that hadn’t submitted income tax returns for 2024 and 2025. SARS didn’t explicitly say the timing issue was the reason for the cancellation, though that was the concern many had raised.
The reprieve is over
Tax Consulting SA says SARS began issuing new final demands in October 2026, and that these signal the end of the earlier cancellation. In its words, SARS has restarted enforcement after the concerns about the legal validity of the initial penalty process led to the temporary reprieve.
The group’s message is blunt: the earlier penalties were reversed, but the underlying obligation to submit trust income tax returns hasn’t changed. It also points out that trustees, as representative taxpayers, have had adequate notice and enough time to regularise their trusts’ affairs, and that SARS has repeatedly warned about trust compliance.
What the penalties look like
- Amount: R250 to R16,000 per month, depending on the applicable statutory penalty category
- Legal basis: Section 211 of the Tax Administration Act
- Duration: Penalties may recur for up to 35 months while non-compliance continues
What trustees should do
Tax Consulting SA recommends that trustees:
- Review the trust’s compliance status urgently.
- Submit any outstanding income tax returns within the prescribed 21-business-day period of the final demand.
- Check that previously reversed penalties have been removed from the trust’s SARS account.
- Deal with dormant trusts properly. Inactive trusts aren’t automatically exempt from filing and may still be penalised. Where appropriate, pursue formal deregistration.
The bottom line
Tax Consulting SA says the “hourglass is fast running out” for trusts with outstanding returns. The cancellation in July was a pause, not an amnesty. If you’re a trustee, check your filing position now, because penalties that recur monthly add up quickly. If you’re unsure where your trust stands, speak to a qualified tax practitioner.
Source: Tax Consulting SA commentary on SARS final demand notices, as reported in the original article.
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