South Africans with trusts are next on the SARS chopping block

With SARS increasing its scrutiny of trusts, experts warned that even closed or inactive trusts may face penalties if they have not been properly deregistered.

This is according to Tax Consulting South Africa’s Founder and the Current Chairman of the Board for the South African Institute of Taxation (SAIT), Jerry Botha.

He noted that there have been plenty of conversations surrounding the South African Revenue Service’s (SARS) efforts to go after non-compliance of trusts.

In 2026, SARS started imposing recurring compliance penalties on certain trusts. Now, these penalties have been reversed.

In the meantime, SARS advised South African taxpayers to use this time to submit outstanding Trust Income Tax Returns.

“As usual, there are two sides to any battle coming,” Botha said. “SARS wants trusts to be fully compliant, just like normal taxpayers.”

“There are many providers who want to resist this, and though some of their reasons may be extremely valid, others are less valid.”

As in all battles, Botha said the victims are mostly the innocent parties, and those who need the most help are the least advised.

There are very specific technical terms related to trust, such as the founder, settlor, trustees, beneficiaries, and authorised representatives.

To illustrate how SARS approaches trusts, Botha used an example of someone with “involvement” in a trust. This could look like many different things.

For example, this person could be a highly qualified professional with expert knowledge of trusts and decades of experience.

However, it could also be a trust-fund baby who has never had to worry about all the technical terms, or simply someone who is aware that they are part of a trust.

The issue arises when they believe the matter is “taken care of”. Even if they have not received anything from the trust, they may not want to rattle the family cage by asking.

“In the showdown between SARS and certain trusts that is coming, you may get caught on the wrong side of the firing line.”

Botha stressed that ignorance of the law is not an excuse. This means that not knowing what is happening within the trust could leave them in a very vulnerable situation.

How trustees can protect themselves against SARS risks

Since trusts are about other people controlling other people’s money, Botha said they can be a sensitive topic. However, South Africans still need to manage their personal risk and ensure SARS does not come after them.

Botha advised people involved in trusts to check with the person responsible for the trust’s SARS compliance to confirm that its tax affairs are up to date.

They should also enquire specifically that neither they nor the trust face penalties or other risks, including where the trust has been closed.

To ensure there are no issues with the trust, Botha recommended that those involved ask the person responsible for the trust’s compliance the following questions:

• Whether they are the correct person to provide assurance on the trust’s SARS compliance, and, if not, who should be contacted.
• Whether the trust is correctly registered with SARS, even if it does not have taxable income.
• Whether the trust’s tax returns and SARS records are fully up to date.
• Whether there is a plan to correct any inaccuracies in the trust’s SARS records.
• Whether there is anything relating to the trust that needs to be reported in the individual’s personal tax return.
• Whether the individual could be held directly or indirectly responsible in their personal capacity for any SARS or trust non-compliance.

Notably, Botha warned that even closed trusts and trusts with no value are a risk. There are two very simple reasons for this.

First, many trusts have been deregistered with the Master of the High Court, but not with SARS. There is no automatic connection between SARS and the Master.

Botha explained that whoever deregistered the trust, or was supposed to, must provide proof of the SARS deregistration.

Second, where a trust is still showing on the SARS system, eFiling will automatically impose recurring administrative penalties under the Tax Administration Act.

Botha stressed that anyone who wishes to dissolve a trust must make sure it is properly closed before the penalties kick in.

“This is not a matter of debate or technical opinion – the SARS system is SARS’ truth. It is wise to know what SARS thinks and quickly fix any incorrect information.”

It is worth remembering that failing to keep taxpayer information up to date with SARS is a criminal offence under section 234 of the Tax Administration Act, he added.

“Rather be proactive and self-correct than beating your chest and declaring war against SARS when their system details are outdated, and you do not have irrefutable proof that you did indeed inform SARS of the change.”

Where taxpayers are uncertain, Botha encouraged them to consult with their SAIT Tax Practitioner to check the SARS system.