Trustees must act swiftly to submit their 2024 and 2025 income tax returns to the South African Revenue Service (Sars) by May 4, 2026 to avoid automated penalties. This article outlines the new compliance measures and the implications of non-submission.
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The South African Revenue Services (Sars) has recently introduced automated administrative penalties for trusts that fail to submit their income tax returns (ITR12T). These penalties follow a draft notice issued for public comment on December 3, 2025.
The aim is to formalise penalties for trust non-compliance under Section 210(2) of the Tax Administration Act. No registered trust with the Master is exempt, regardless of whether trustees describe it as a “dormant” or “passive” trust. No trust is exempt. Sars is also relying on details of registered trusts received from the Master and third-party data providers, such as banks, to identify unregistered trusts.
The penalties are fixed monthly amounts based on the assessed loss or taxable income, ranging from R 250 to R 16,000 per month. Therefore, even if a trust has no activity, it will incur these penalties for non-compliance.
Sars started issuing final demands to trusts with outstanding 2024 and 2025 returns as of February 9, 2026, marking the first wave of automated penalties. However, it is only now that Sars gazetted a public notice under Section 210 of the Tax Administration Act on March 27, 2026, allowing it to impose these monthly penalties for failing to submit the 2024 and 2025 tax returns.
The failure to submit these income tax returns is now classified as a non-compliance incident subject to an administrative non-compliance penalty under Section 211 of the Tax Administration Act. Note that Sars considers that letters already issued do not need to be reissued, and trustees should act urgently to avoid penalties. Sars will continue to issue final demands to more trusts.
From May 4, 2026 (Sars is planning to do a run on May 4, and again on May 8, 2026), Sars will issue penalty assessment notices (AP34) to inform taxpayers of administrative non-compliance penalties imposed for non-compliance with outstanding trust income tax returns. The notice will include details of the penalties imposed, the tax periods for which the income tax returns are outstanding, and the corrective measures to prevent future penalties.
The penalty amount will be automatically imposed for up to 36 months, or until the trustees rectify the non-compliance. If Sars is unable to communicate the penalty assessment, the period may be extended to 47 months.
Sars advised that taxpayers should submit a request for remission if they disagree with the imposition of the penalty. This can now be done through e-filing for trusts.
All requirements are now in place to implement these penalties, and trustees are urged to act immediately. Trustees should focus on the 2024 and 2025 tax returns to avoid immediate penalties. Afterwards, they should submit all outstanding tax returns to prevent future penalties. In complex trusts, this may be difficult, as some tax rules, such as the attribution rules and the treatment of expenses under Section 25B of the Income Tax Act, are intricate and require cumulative and rollover calculations. Therefore, it might not be practical to start with the 2024 and 2025 tax returns if many other returns remain unsubmitted.
* Van der Spuy is a Chartered Accountant with a Master's degree in tax and a registered Fiduciary Practitioner of South Africa®, a Chartered Tax Adviser, a Trust and Estate Practitioner (TEP), and the founder of Trusteeze®, the provider of a digital trust solution.
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