Many Trustees awoke this Monday morning to a final demand to submit outstanding income tax returns of the Trust in terms of a public notice issued in terms of Section 210(2) of the Tax Administration Act.
Those Trustees who have not as yet submitted the tax returns for their Trust have formally been given 21 business days to the submit the outstanding returns.
Should the Trustees not submit the returns within the 21 business days, administrative penalties will be imposed on a monthly basis per outstanding return.
These administrative penalties will run for 36 months and are based on a table dependent upon the taxable income of the Trust.
Even if the Trustees had, in fact, distributed all of the taxable income to beneficiaries, there could still be an administrative penalty of R250.00 per month.
The level of the administrative penalty increases with the level of taxable income up to a maximum of R16,000 per month.
It is imperative for Trustees to note that the final demand also reiterates the probability of a Summons being issued or criminal prosecution against the trustees which would be subject to imprisonment of up to two years.
Trustees are urged to ensure that their Trust affairs are brought up to date as this is now a major focus area of SARS due to the broadening of the pre-population of information on the individual (i.e., beneficiaries of the Trust) tax returns with Trust distribution information through the IT3t process.
We also take this opportunity to remind Trustees that they ought to have lodged their IT3t by the end of September each year (effective from the 2025 tax year) and those Trustees who have not the relevant IT3t submission recording the distributions to beneficiaries need to ensure that at the earliest the Trust Annual Financial Statements are brought up to date so that the exact and correct amount of this distribution can be recorded in the IT3t preferably before the end of October.
Trustees are advised that in future, similar administrative or other penalties may be imposed by SARS for the late submission of the IT3t tax return.
