SARS Enforces Automated Penalties for Non-Compliant Trusts

The South African Revenue Service (SARS) has been on a drive urging all trusts registered in South African to submit income tax returns for every year of assessment in line with legislative requirements.

The time to rectify non-compliance has run out.

Due to recent legislative updates SARS is intensifying compliance requirements. Non-compliant trusts are the latest group of taxpayers who will be facing punitive administrative penalties. SARS has begun enforcing automated administrative penalties against trusts that fail to submit their income tax returns (ITR12T). This marks a significant shift from warnings and reminders to active and ongoing enforcement, with potentially substantial financial consequences for trustees.

These penalties arise from a draft notice published for public comment on 3 December 2025 and are now fully authorised under section 210(2) of the Tax Administration Act (TAA), following the gazetting of the final public notice on 27 March 2026.

All trusts registered with the Master are affected, without exception, including dormant or inactive trusts.

Current Enforcement Timeline

SARS commenced the issuance of final demands to trusts with outstanding 2024 and 2025 income tax returns on 9 February 2026, marking the first phase of its automated enforcement programme.

From 4 May 2026 SARS will issue formal penalty assessment notices (AP34) to affected trusts. These notices will detail the penalties imposed, the tax periods concerned, and the steps required to remedy the non-compliance and prevent further penalties.

Nature of the Penalties

The penalties imposed are fixed, monthly administrative penalties, determined with reference to the trust’s assessed loss or taxable income. The monthly amounts range from R250 to R16,000 per return, depending on the trust’s circumstances.

Once imposed, penalties continue to accrue automatically for up to 36 months, or until the outstanding returns are submitted. Where SARS is unable to successfully communicate the penalty assessment to the trust, this period may extend to 47 months, significantly increasing the potential cost of non-compliance.

Remission of Penalties

Trustees who believe that penalties have been incorrectly imposed, or who have valid grounds for relief, may submit a request for remission. SARS has confirmed that remission applications can now be submitted via eFiling for trusts.

However, remission is not automatic and must be properly motivated. Importantly, submitting outstanding returns remains a critical first step in stopping the continued accrual of penalties.

What Trustees Should Do Now

Trustees are strongly advised to act without delay. In particular, trustees should:

Identify all trusts for which they act, including dormant or inactive trusts.
Confirm that each trust is correctly registered and active on SARS eFiling.
Determine whether any trust income tax returns remain outstanding, especially for 2024 and 2025.
Prioritise the submission of the 2024 and 2025 returns to prevent or limit further penalties.
Review all SARS correspondence, including final demands and penalty notices.
Seek professional assistance where trusts are complex or where multiple historic returns are outstanding.

Conclusion

SARS has made it clear that trust tax compliance is now a priority enforcement area. With all legal and administrative requirements in place, penalties are no longer theoretical but are being applied automatically and systematically.

Trustees who fail to act risk accumulating significant monthly penalties that may be difficult to reverse. Early intervention and prompt compliance is essential in mitigating financial exposure.

Professional advice can be invaluable in navigating this process, particularly where trusts are complex or compliance gaps extend over multiple years.

Frequently Asked Questions (FAQs) for Trustees

Does this apply to dormant or inactive trusts?
Yes. All trusts registered with the Master of the High Court are required to submit income tax returns, regardless of whether the trust is dormant, inactive, or has no income. There are no exemptions based on inactivity.
What if the trust has never earned any income?
A lack of income does not remove the filing obligation. Even where a trust has no income, assets, or transactions, an ITR12T return must still be submitted. Failure to do so may result in penalties.
How much are the penalties?
Penalties are fixed monthly amounts ranging from R250 to R16,000 per month, depending on the trust’s assessed loss or taxable income. The amount applies per outstanding return.
When do penalties start applying?
SARS has already issued final demands for outstanding 2024 and 2025 trust returns. From 4 May 2026 SARS will issue formal penalty assessment notices (AP34), following which penalties will accrue automatically if non-compliance continues.
How long can penalties continue?
Penalties may be imposed for up to 36 months, or until the outstanding returns are submitted. If SARS is unable to successfully communicate the penalty assessment, this period may extend to 47 months.
What is an AP34 notice?
An AP34 is a formal SARS administrative penalty assessment notice. It sets out the amount of the penalty, the tax years affected, and what must be done to stop further penalties.
Can penalties be cancelled or reduced?
Yes. Trustees may submit a request for remission if they believe penalties were imposed incorrectly or if valid grounds for relief exist. Remission applications must be properly motivated and are submitted via SARS eFiling for trusts.
Should returns be submitted before applying for remission?
Yes. Submitting outstanding returns is critical to stop penalties from continuing to accrue. Remission applications are generally more effective once the underlying non-compliance has been rectified.
What if multiple years of returns are outstanding?
Where several years are outstanding, particularly in complex trusts, careful planning may be required. Trustees should prioritise the most recent returns (especially 2024 and 2025) and seek professional assistance where older returns involve cumulative calculations or attribution rules.
How is SARS identifying non-compliant trusts?
SARS is using information obtained from the Master of the High Court and third-party data providers, including banks, to identify trusts that are not registered or not compliant. Non-compliance therefore likely to be detected even in the absence of recent SARS correspondence.
What are the risks of doing nothing?
Failure to act may result in ongoing monthly penalties that accumulate quickly and can become substantial over time. Once imposed, penalties may be difficult to reverse without strong grounds and proper engagement with SARS.