SARS Issues Stern New Compliance Signal to South African Taxpayers

The South African Revenue Service released a draft notice in terms of section 210(2) of the Tax Administration Act, signalling its intention to introduce fixed administrative penalties for trusts that do not submit tax returns as required. The publication of this draft indicates that SARS is transitioning from years of cautionary messaging to a more assertive enforcement posture that places non-compliant trusts firmly in its sights. A common misunderstanding among trustees is that only trading trusts must file returns, but SARS requires returns for all registered trusts.

Key Takeaways

• SARS is shifting from warnings to active enforcement: The draft notice signals that administrative penalties for non-compliant trusts will soon be applied consistently once finalised.
• Trustees face higher accountability and operational risks: Failure to maintain accurate records, submit returns and manage governance properly may lead to penalties, strained beneficiary relationships and reputational harm.
• Early preparation is strongly advised: Trusts are encouraged to resolve outstanding returns, strengthen administration and review documentation before the 19 January 2026 deadline to avoid penalties once the new framework takes effect.

Escalating Enforcement Measures Signal a Turning Point for Trust Compliance

Tax specialists at Tax Consulting SA observed that although the document is still undergoing consultation, its appearance represents a significant escalation in SARS’s approach, as it demonstrates a readiness to implement stronger corrective measures. Their view is that this moment marks the clearest indication yet that SARS is preparing to translate longstanding warnings into tangible obligations for trustees.

According to the contents of the draft notice, a trust could be subjected to an administrative penalty if it fails to file its income tax return for any year of assessment from 2023 onwards and does not do so within 21 business days after SARS has issued a final demand. The proposal therefore puts trustees on explicit notice that delayed or ignored submissions will no longer be tolerated once the framework becomes operational.

Tax Consulting SA explained that this development represents a decisive shift for trustees, who can no longer regard previous communication from SARS as advisory in nature. Instead, SARS is now clearly laying the procedural groundwork to activate punitive measures that will apply as soon as the proposal is finalised.

The draft rules were made available for public scrutiny on 3 December 2025 and SARS has requested that all feedback be submitted by 28 January 2026. This consultation period allows stakeholders to raise concerns or offer technical input before the final version is implemented. It is worth noting that draft notices often undergo amendments if substantial technical concerns are raised by industry groups.

Heightened Scrutiny Shows SARS’s Intensifying Focus on Trust Governance

Industry commentators noted that stricter compliance oversight has been anticipated for some time, particularly given SARS’s stated intention to close loopholes and improve data accuracy. With the release of this draft, they believe the long awaited transition towards heightened enforcement has effectively arrived.

The experts added that SARS has been increasingly vigilant about how trusts handle distributions, capture beneficiary information and maintain loan account records. Given these developments, the period when trustees could assume their trusts were unlikely to attract consequences for minor or historic non-compliance is drawing to a close. Trustees are often advised to keep beneficiary resolutions, loan agreements and trust minutes stored digitally to reduce audit delays.

Trusts Urged to Act Early as SARS Moves Closer to Full Penalty Enforcement

Tax Consulting SA emphasised that despite the draft status of the notice, neither trustees nor trust taxpayers should delay their preparations. They advised that the consultation window offers a valuable opportunity to identify and resolve outstanding returns, verify documentation, improve administrative processes and respond to any SARS communications before penalties start accruing.

Their view is that SARS has moved from simply urging the trust sector to improve its behaviour to formally laying the foundation for an active penalty regime. As a result, any trust that has fallen behind on its compliance obligations should act promptly to avoid severe consequences once the notice takes effect.

Filing season for trusts remains open and trusts have until 19 January 2026 to complete their submissions, review their tax affairs and ensure that both administrative processes and financial records are up to date before SARS takes the next step towards full implementation.

Conclusion

The draft notice issued by SARS marks a decisive shift towards stricter enforcement within the trust sector, signalling the end of an era in which non-compliance carried minimal consequences. With administrative penalties set to become a reality once the framework is finalised, trustees are under growing pressure to ensure that their records, submissions and governance practices meet the standards required by tax legislation. The heightened scrutiny, coupled with increased operational and reputational risks, makes it essential for trusts to act without delay by reviewing outstanding filings, strengthening administrative processes and responding promptly to any SARS communication. As the filing season deadline approaches, proactive compliance remains the most effective way to avoid penalties and maintain trust integrity moving forward.