Trusts: SARS Enforces Penalties 

As the South African Revenue Service (SARS) intensifies its focus on trust compliance, trustees and tax practitioners must be aware of recent changes and upcoming enforcement measures. Here’s an updated overview of the current situation and what to expect: 

Key Developments in Trust Compliance 

SARS has announced that administrative penalties for non-compliance with trust tax obligations will be introduced from April 2025. These penalties will apply retrospectively for the non-submission of trust income tax returns and prospectively for non-submission of IT3(t) third-party data returns. 

IT3(t) Reporting Requirement 

• Trusts are now required to submit IT3(t) returns annually, reporting amounts vested in beneficiaries, including net income, capital gains, and capital amounts. 

• The IT3(t) submissions were due by 30 September for the 2024 tax year. 

• No penalties will be imposed for late or non-submission of IT3(t) returns for the 2024 tax year, but SARS strongly encourages compliance to establish a compliant track record. 

Administrative Penalties for Non-Compliance 

From April 2025, SARS will begin imposing administrative penalties for: 

1. Non-submission of trust income tax returns, applied retrospectively. 

2. Non-submission of future IT3(t) returns. 

The penalty amounts are confirmed under Section 210(1) of the Tax Administration Act 28 of 2011: 

• Penalties range from R250 to R16,000 per month per outstanding return, depending on the trust’s taxable income. 

• Even dormant trusts with no taxable income may incur a minimum penalty of R250 per month per return. 

Trustee Responsibilities 

Trustees are legally responsible for ensuring compliance with all SARS requirements. Trustees must: 

• Submit accurate and timely annual income tax returns (ITR12T). 

• File IT3(t) returns going forward to avoid penalties from April 2025. 

SARS’ Focus on Compliance 

SARS has identified significant non-compliance among trusts, including delayed registration (often taking up to two and a half years after registration with the Master). This has prompted stricter enforcement measures. Trustees should also note that SARS does not recognise “dormant” trusts if they hold assets or liabilities—such trusts must still file returns. 

What Trustees Should Do Now 

1. Review and update all outstanding trust tax filings immediately. 

2. Ensure all required documentation is in place, including financial statements, trust instruments, and trustee resolutions. 

3. Prepare for future IT3(t) submissions by maintaining accurate records of distributions to beneficiaries. 

By acting now, trustees can avoid costly penalties and ensure their trusts remain compliant with SARS’ evolving requirements. The April 2025 deadline marks a turning point in SARS’ enforcement strategy—trustees should not delay in addressing any gaps in compliance.