Non-Compliant Trust? Penalties are Piling up…

“Trustees are reminded that compliance is mandatory, and non-compliance can result in fines and penalties.” (SARS)

SARS has significantly increased its scrutiny of trust administration. What’s more, from the beginning of May 2026, automated administrative penalties apply to all non-compliant trusts – without exception.

Whether a trust is active or dormant, the trustees have a legal obligation to comply with SARS requirements, and the consequences of failing to do so are now immediate and ongoing.

What does trust compliance entail?

All trusts must:

File a tax return (ITR12T) annually, whether economically active or not.
Update and maintain trust information reflected on the SARS system.
Maintain a detailed organogram and records of the founder, trustees, donors, and beneficiaries.
Maintain strict records of financial statements, trust deeds, and minutes of trustee meetings.
Submit IT3(t) returns reporting detailed information on distributions and amounts vested in beneficiaries, enabling SARS to cross-reference data with beneficiaries’ personal tax returns.
Some trusts may also be subject to provisional tax requirements.

Who is responsible?

Trustees act as representative taxpayers of a trust in terms of the Income Tax Act and personally bear sole responsibility for ensuring full compliance.

This includes maintaining accurate trust information, ensuring that all legal and tax obligations are met, and initiating deregistration processes for trusts that meet the applicable criteria.

Consequences of non-compliance

From 4 May 2026, SARS will issue a penalty assessment notice for all outstanding trust income tax returns for tax periods from 2024 onwards.

Designed to encourage compliance, these penalties are applied consistently, recurring monthly until non-compliance is corrected. Monthly administrative penalties may range from R250 to R16,000 per outstanding return, depending on the trust’s taxable income for the preceding year and will accumulate until the non-compliance is corrected, up to a maximum of 35 months.

It doesn’t stop there. SARS may in specific circumstances hold trustees personally liable for the trust’s tax debts, and trustees are individually and jointly liable for the trust’s tax compliance.

In addition, non-compliance with SARS obligations may be regarded as a criminal offence and will attract penalties and interest. Trustees who fail to act face penalties, interest, and potential criminal charges.

What if my trust is no longer in use?

SARS requires all registered resident trusts, without exception (and certain qualifying non-resident trusts), to meet the range of ongoing obligations.

A trust’s tax compliance obligations only come to an end once it has been formally deregistered with SARS. Until this process is finalised, the trust remains active for tax purposes and is exposed to penalties for continued non-compliance.

Where a trust is no longer being used for its intended purpose, trustees are encouraged to formally terminate the trust. The first step is to regularise the trust’s tax affairs by submitting all outstanding returns, settling all tax liabilities, and updating all trust information.

Thereafter the trust can be formally terminated through the Office of the Master of the High Court. Once the Master has issued written confirmation of termination, trustees can ask SARS to deregister the trust for income tax purposes.

Count on our expertise

If you have a trust, active or not, and are uncertain about its compliance status, contact us for expert advice and professional assistance.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.