The South African Revenue Service (SARS) has resumed issuing final demand notices to trusts with outstanding income tax returns, warning trustees that failure to comply could result in administrative penalties of up to R16,000 per month.
The latest move follows a temporary reprieve earlier in 2026, when SARS cancelled penalties imposed on certain trusts that had failed to submit their 2024 and 2025 income tax returns. The cancellation followed concerns about the timing of the original penalty notices and the legal requirements surrounding their implementation.
However, the return of final demand letters in October signals that SARS is moving ahead with enforcement again. Trustees are being urged not to mistake the earlier cancellation of penalties for an exemption from their tax obligations.
Penalties Could Accumulate Over Time
Under the applicable tax administration rules, penalties for outstanding returns can range from R250 to R16,000 per month, depending on the relevant penalty category. These charges may continue for up to 35 months while non-compliance persists, potentially creating a significant financial burden for affected trusts.
Trustees who receive a qualifying final demand must take action within the specified period. According to tax experts, the notices provide 21 business days for affected trusts to submit outstanding returns and bring their tax affairs up to date.
Importantly, trusts that are dormant or inactive are not automatically exempt from filing requirements. Trustees should confirm their obligations with SARS and pursue formal deregistration where appropriate.
What Trustees Should Do
Trustees are encouraged to check their SARS eFiling profiles, identify outstanding returns and submit the required documents as soon as possible. They should also verify whether previously cancelled penalties have been removed from their accounts.
Those who believe a penalty has been incorrectly imposed can explore the appropriate dispute or penalty-remission process with SARS. However, submitting outstanding returns remains important to prevent further penalties from accumulating.
The renewed enforcement serves as a reminder that maintaining tax compliance is essential, even when a trust is not actively trading. Trustees who ignore outstanding filing requirements risk facing mounting penalties and further complications with their tax affairs.
As SARS strengthens its compliance efforts, trustees are urged to act promptly rather than wait until additional charges are imposed.
Main image: Moneyweb
