New SARS boss sends a message to one group of taxpayers in South Africa

The South African Revenue Service is intensifying its focus on provisional taxpayers in South Africa, particularly those who use trusts to hold assets or receive income. 

This is part of the revenue service’s efforts under the new Commissioner, Dr Johnstone Makhubu, to broaden the personal income tax (PIT) base in the country. 

Makhubu, who took over from Edward Kieswetter on 1 May, explained that South Africa has a highly concentrated PIT base. 

With PIT making up the largest share of the government’s revenue, it puts the state’s budget at significant risk from external shocks, such as the conflict in the Middle East. 

While this is partly due to South Africa’s stagnant economy over the past decade, Makhubu told Newzroom Afrika that there is significant scope to broaden the tax base through other means. 

“Ultimately, 13.2% of those in the PIT population in South Africa account for over 50% of the total tax we collect,” Makhubu said.

“That suggests that we have a very narrow tax base and that speaks to the risks we are facing from external shocks to revenue.” 

This has been a challenge for SARS for the past decade, with it squeezing an increasing amount of revenue from a stagnant tax base. 

It has implemented mandatory PIT registration, which has increased the number of registered individuals, but many still earn incomes below the tax threshold. 

This means the country has a significant number of individuals who effectively stack up at zero and do not contribute to PIT collections.

As a result, a small number of high earners and the middle class are left to foot the bill for growing state expenditure. 

“This is why one of my focus areas as I come in is to broaden that tax base. Our conviction is that we do have quite a high level of non-compliance,” Makhubu said. 

“In particular, we have non-compliance in terms of provisional taxpayers and trusts, more specifically. That presents us with an opportunity to expand the tax base.” 

Makhubu explained that the ultimate aim is to have more people paying a smaller amount of tax each year than a few individuals paying a large amount.

Trusts under the spotlight

SARS has placed particular emphasis on trusts as part of its compliance drive in South Africa, with the revenue service ending its period of leniency on these instruments. 

In recent months, it has stepped up enforcement by issuing final demands for outstanding tax returns and warning trustees that they have a limited period of time to comply or they will be penalised. 

SARS reiterated that all trusts, whether economically active or passive, are required to submit annual income tax returns in accordance with the requirements set out in the public notice. 

Makhubu is not about to let up the pressure on trusts, with the Commissioner singling them out as part of his compliance efforts. 

“We are working with others in government to exchange data as they relate to trusts and make sure what we have is as clean as possible,” Makhubu said. 

“Trusts transact in the ecosystem, they have bank accounts and interact in the financial system on an ongoing basis. We can track that.” 

Makhubu said the revenue service has increasingly turned to data collection to analyse the income received by trusts and how trustees benefit or spend that money.

“Data is the lifeblood of a tax administration, and we want to use data to zone into trusts and ensure they are as compliant as they can be,” Makhubu said.

“I must also state that there is an element of taxpayer education and outreach that should also give SARS the ability to make taxpayers aware of their obligations.” 

This aims to make compliance as easy and seamless as possible, which will naturally result in increased revenue being collected by SARS. 

“However, if that compliance still does not come through, then we have to responsibly enforce, and we do intend to heighten our integrated enforcement going forward,” Makhubu said. 

Tax Consulting SA’s Head of Trusts, Roxshanna du Toit, explained that this shows SARS’ era of leniency with regard to trusts is over. 

“Since 3 February 2026, SARS has begun issuing final demand notices to trusts with outstanding income tax returns for the 2024 and 2025 years of assessment,” she said.

“Rather than allowing an extended post-filing grace period, SARS has moved swiftly to identify non-compliant trusts and initiate enforcement.”

Du Toit warned that once a final demand is issued, trustees are no longer dealing with routine compliance.

“They are responding to a formal enforcement action with a fixed statutory deadline. From the date of the final demand, trustees have 21 business days to submit outstanding returns,” she said.

“There is no further grace period. Where returns are not submitted in time, administrative penalties will be imposed.”