SARS issues final demand letters as fines loom for certain taxpayers

• SARS has resumed sending final demand letters to trusts that have not submitted outstanding income tax returns
• Monthly penalties under the Tax Administration Act range from R250 to R16,000, depending on the trust's taxable income
• Trustees who receive a final demand notice have 21 business days to submit their returns before penalties are applied

The South African Revenue Service (SARS) has reissued final demand letters to trusts with outstanding income tax returns, signalling that a temporary pause on penalties is officially over.

Trustees who receive one of these letters have 21 business days to submit all outstanding returns. Failure to do so will trigger monthly administrative penalties under Section 211 of the Tax Administration Act (TAA), which range from R250 to R16,000 per month for each unfiled return, and can accumulate for up to 35 months.

Why SARS paused and restarted enforcement

According to reports, the penalties were briefly suspended after a procedural dispute arose earlier in 2026. SARS had issued final demand notices to trusts in February 2026, but the public notice legally authorising those penalties was only gazetted on 27 March 2026. Because the demand letters predated the gazette, questions were raised about their legal standing. SARS responded on 6 July 2026 by cancelling penalties related to unfiled 2024 and 2025 trust returns. The October 2026 reissuance of final demands confirms that SARS has resolved those procedural concerns and is now moving forward with enforcement.

What trustees must do now

The penalty amount is not a flat rate. It is calculated based on the trust's taxable income or assessed loss from the previous tax year, starting at R250 per month for trusts with income up to R250,000, and rising to R16,000 per month for those with income above R50 million.

Trustees should log on to SARS eFiling as soon as possible to check whether a final demand notice has been issued against their trust's profile. Those who received penalty cancellations during the February to July 2026 window should also verify that those reversals are correctly reflected on their SARS Statement of Account.

One common misconception is that inactive or dormant trusts are not required to file. SARS is clear that all trusts, including family trusts, property-holding structures, and those with no trading activity, must still submit an annual income tax return using the ITR12T form. The only way to avoid this obligation is to formally deregister the trust with both SARS and the Master of the High Court.

For the 2026 tax year, the general submission deadline for provisional taxpayers and trusts falls on 22 January 2027. However, a 21-day final demand notice overrides that deadline entirely and requires immediate action.

More on SARS

• Briefly News recently reported on what South Africans still need to file before the SARS 23 October 2026 deadline for non-provisional taxpayers.
• A tax expert warned that routine transfers between your m bank accounts could attract SARS scrutiny, leaving South Africans frustrated.
• SARS commissioner Dr Johnstone Makhubu announced that the tax authority is hunting down small debts from ordinary taxpayers, with some getting just 10 days to pay or respond.

Source: Briefly News

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