For years, many South African trusts have slipped under the radar when it comes to filing obligations, reporting duties and overall compliance. SARS has warned repeatedly that this era is coming to an end. Although formal notice is yet to be published, this move is widely anticipated as the tax authority tightens oversight on trusts and taxation. According to recent guidance from the South African Institute of Chartered Accountants, administrative penalties on the ITR12T (the annual trust tax return) are expected from February 2026. For trustees, beneficiaries and tax practitioners, this is the moment SARS draws the line in the sand.
This shift matters because it changes trust compliance from something often treated as optional to something fully monitored, fully enforced and fully penalised. Whether yours is a high value family structure, a simple shelf trust or a dormant trust created decades ago, the rules now apply equally, so beware.
Key takeaways on trusts in South Africa
- All South African trusts must now comply. SARS will enforce annual filing of the ITR12T for every trust, including dormant trusts, with penalties expected from February 2026.
- IT3(t) reporting becomes non-negotiable. Trustee submissions on distributions and vested amounts will feed into SARS’s automated cross checking systems, increasing scrutiny on beneficiaries.
- Non residents are directly affected. South African expats receiving trust distributions or serving as trustees will face greater oversight, higher compliance risk and tighter reporting obligations.
Read more:What you need to know about the new rules on offshore distributions from South African trusts.
SARS will penalise non compliance on all trust tax returns
SARS is expected to begin issuing administrative penalties against trusts that fail to submit the ITR12T by the due date. These penalties are similar to the well known penalties for late submission of tax returns in South Africa that apply to individuals and companies, and will quickly add up if trustees ignore their duties. With penalty automation now built into SARS systems, non compliant trusts will be flagged almost instantly.
For context, trusts are required to file a trust income tax return every year, even if they are dormant, inactive or have not earned trust taxable income. The misconception that dormant trusts do not need to file has been directly rejected by SARS, and the universal filing obligation is now absolute.
Every trust must file annually, even dormant trusts
Thousands of trusts in South Africa have had little activity for years. SARS has made it clear that it does not matter. If a trust legally exists, it must have had trust income tax registration to hold a valid trust registration number South Africa, and an ITR12T must be filed annually. This applies to all trust types, including family trusts, business trusts and bewind trust structures in South Africa.
If your trust has never been registered for income tax, trustees must complete the IT77TR form now to register trust for income tax. Failure to do so may now result in historic assessments, penalties and interest once the new enforcement cycle kicks in.
Read more: Six smart reasons why South Africans should establish offshore trust.
IT3(t) reporting is now a key enforcement tool for trust compliance
The biggest change is the strengthened enforcement of the IT3(t) reporting system. Trustees must submit IT3(t) information that details all income, capital gains and vested distributions made to beneficiaries. SARS then automatically cross checks this information with the beneficiaries own tax returns.
This matters for compliance because IT3(t) data gives SARS visibility on:
- Trust distributions to beneficiaries in South Africa
- Capital gains tax on trust distributions
- Trust distributions to non residents
- Whether beneficiaries have correctly declared tax on trust distributions
With this data on hand, SARS can tighten audits on trust taxes, trusts and capital gains tax, CGT and trusts and the taxation of capital gains in a trust.
Trustees must complete a historic clean up
Tax practitioners are urging trustees to perform a historic clean up before the February 2026 deadline. This includes:
- Filing all overdue trust tax returns
- Updating beneficiary records for trust beneficial ownership
- Correcting incomplete IT3(t) submissions
- Ensuring dormant trusts are properly registered for income tax
- Finalising any outstanding final trust tax return submissions for dissolved trusts
If your South African trust has unpaid returns, incorrect trust accounts records or mismatched distributions, SARS’s automated systems will surface these issues faster than ever before.
Read more: SARS on South African resident trusts distributing to offshore non-resident trusts.
Why trust compliance matters for South African expats
If you live abroad but still have ties to trust funds in South Africa, this crackdown can directly affect you.
1. You may owe tax as a non resident beneficiary
If a trust makes a distribution to you while you live abroad, the trust is required to report this via the IT3(t). SARS will then check whether the amount is taxable in South Africa under the rules for South African tax on trust distributions to beneficiaries.
Non residents can still be taxed on South African sourced income or assets distributed by a trust. With full reporting now enforced, the chance of distributions remaining unnoticed is over.
2. Expat trustees carry full responsibility
If you are a trustee living abroad, you remain legally responsible for filing the ITR12T, the IT3(t) and maintaining compliance with the Trust Property Control Act as amended and the Trust Property Control Act regulations under Trust Property Control Act No 57 1988.
The penalty regime applies to the trust as well as trustees who fail in their fiduciary duties. This raises financial and administrative risk for expat trustees.
3. Trusts linked to past tax emigration must still comply
Even if you completed tax emigration, any South African trust holding assets for your benefit remains fully subject to South African tax laws for trusts. SARS’ new verification processes also make it easier to track cross border flows for reporting under double tax agreements.
The bottom line for trustees and beneficiaries
SARS has drawn a clear line. Whether your trust is active, dormant or barely used, compliance is no longer optional. Trustees must file the ITR12T, complete IT3(t) submissions, declare trust taxable income, and stay aligned with the tax treatment of trusts. South Africans abroad who receive or expect trust distributions must also prepare for increased transparency and tighter enforcement.
Read more: Protecting your assets and beneficiaries with a trust in South Africa: advice for expats.
FinGlobal can help: act now to avoid unnecessary non-compliance
If your trust has overdue returns, missing IT3(t) records or you’re getting bogged down by the wave of uncertainty around trust taxes, now is the time to get ahead of SARS’ new enforcement cycle. FinGlobal’s expert team can assist with anything non-compliance related. We’re also ready to assist expats with cross border tax matters, including tax emigration and tax refunds, giving you a single, expert partner to keep your affairs fully compliant and penalty free.
To learn more about our convenient, trusted cross-border financial and tax solutions for South African expats abroad, leave your contact details below and we’ll be in touch soon.