Non-Compliant Trusts Can Expect Penalties from SARS

31 Jan

The South African Revenue Service (SARS) is tightening its grip on trusts that have not submitted their tax returns. After years of issuing warnings, SARS is expected to start enforcing administrative penalties from April 2025 for trusts that fail to comply.

What You Need to Know

Penalties Are Coming
SARS will begin imposing retrospective penalties on trusts that have not submitted their annual income tax returns. This also includes penalties for failing to submit third-party data returns.
Trustees Are Responsible
SARS places full responsibility for tax compliance on trustees. With the deadline for trust tax submissions having passed on 20 January 2025, trustees must ensure all outstanding returns are submitted as soon as possible.
No More Leniency
In recent years, SARS has taken a softer approach, allowing non-compliant trusts to avoid penalties. However, this grace period is coming to an end. SARS has made it clear that enforcement is now a priority.
All Trusts Must Submit Returns
Whether a trust is active or not, it is still required to submit a tax return every year. SARS does not recognise "dormant" trusts simply because they have no income. If a trust has assets, liabilities, or expenses, a tax return must be filed.
Accurate and Timely Filing Is Crucial
SARS has flagged a high level of non-compliance among trusts when it comes to registration, filing, declarations, and payments. Trusts that delay or file inaccurate returns risk facing costly penalties.

Priority Actions to Ensure Compliance

Check the trust’s compliance status. Ensure all trust tax returns, including third-party data returns, are up to date.
Submit all outstanding returns if a trust has fallen behind.
Ensure accurate reporting as incomplete or incorrect filings can lead to additional penalties.
Advise trustees to take compliance seriously. SARS has indicated that it will no longer be lenient with non-compliant trusts.

The Bottom Line

SARS has signaled a major shift in how it handles trust tax compliance. CIBA members are called to help trustees understand their obligations and ensure they avoid unnecessary fines.

Source: Article in the Daily Investor

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