Trusts that were hit with final demand letters in February for failing to submit their 2024 and 2025 tax returns have effectively been given a reprieve.

Moneyweb reports that they can ignore the letters, and all administrative penalties will be wiped.

The reversal comes after intense pushback from the trust industry, which objected to the issuance of the demand notices before the penalties were legally in force.

The public notice enabling the penalties was only gazetted at the end of March.

Trusts should be able to see the corrections reflected on their penalty statements of account on eFiling. 

‘SARS will, in due course, issue a new final demand letter and will proceed with administrative penalties only in line with the applicable legal requirements,’ it said in the letter.

Phia van der Spuy, founder of Trusteeze, says despite the notice listing the non-submission of income tax returns as a non-compliance only being published at the end of March, SARS continued to rely on the February final demand letters.

The March public notice allowed SARS to impose monthly penalties for failing to submit trust tax returns for 2024 and 2025 only from 4 May.

Van der Spuy previously advised trustees to focus on the 2024 and 2025 tax returns to avoid penalties; thereafter they should submit all outstanding tax returns to prevent future penalties.

The administrative penalty is automatically imposed on the assessed loss or taxable income and ranges between R250 and R16 000 (depending on the income) per outstanding return per month for up to 36 months or until trustees rectify the non-compliance.

Taxpayers can submit a request for remission if they disagree with the penalty.

Moneyweb notes that this can be done through the eFiling system for trusts.

Full Moneyweb report