Trustees of dormant trusts must act now as Sars begins enforcing penalties for non-compliance. This article explores the implications for trustees and the necessary steps to ensure compliance.
Trustees who have neglected dormant, inactive, or long-forgotten trusts are being urged to review their tax affairs as the South African Revenue Service (Sars) begins imposing administrative penalties for trust non-compliance.
Sars recently confirmed that the imposition of administrative non-compliance penalties for trusts, originally scheduled to commence earlier this year, was deferred until May 4, 2026, to give trustees additional time to regularise their affairs. With the grace period now over, the spotlight falls squarely on trusts that have outstanding tax returns, unresolved tax obligations, or incomplete deregistration processes.
This development comes against the backdrop of South Africa's extensive trust sector, where many trusts established for estate-planning, asset protection, or family succession purposes remain registered long after their original objectives have been met. In some cases, trusts cease operating altogether but continue to exist on official records, creating compliance risks for trustees who assume no further action is required.
