Tax Shop Blaauwberg Accountants

14/07/2026

14/07/2026

TRUST VS SARS

Why did SARS write trust penalties off?
It could not have been easy for SARS to wave goodbye to more than R 70 million by writing off the first wave of penalties recently issued to trustees for non-compliance, as SARS currently relies on a narrow tax base, with only 13.2% of the Personal Income Tax population producing more than 50% of SA’s total tax collections. That is not sustainable and presents a concentration risk for SARS. SARS cannot squeeze more tax from a stagnant tax base, with many people not even paying tax because they fall below the tax threshold. SARS’s focus (as continued by SARS’s new Commissioner, Dr Johnstone Makhubu) is clear: to broaden the tax base and zoom in on provisional taxpayers, especially those who use trusts and receive income. This will be done by focusing on non-compliance. The recent introduction of penalties for trust non-compliance demonstrates SARS’s plan. It is therefore important to understand why SARS has reversed the first penalties issued for non-compliant trustees, given its focus on trusts.
Delinquent trustee
For years, trustees have become accustomed to holding only the title of trustee, without fulfilling their fiduciary duties, which are the legal obligations of trustees to act in the best interests of beneficiaries - the highest legal obligation of good faith, loyalty, and care. Why this neglect? Over the years, there were hardly any consequences for non-compliance with their legal duties, including the requirement to register the trust as a taxpayer and submit annual tax returns. Although SARS has been actively planning and communicating the imminent introduction of penalties for non-compliance by trustees (the last taxpayers, since penalties for individuals’ and companies’ non-compliance were introduced in 2009 and 2018, respectively) since 2024, trustees chose to turn a blind eye and were probably hoping to maintain the status quo. That is unfortunately catching up with them, even though SARS communicated that they were willing to write off the first wave of penalties issued in May 2026, an interim relief.

Why did SARS write it off?
In December 2025, after SARS confirmed its ability to implement system changes to administer the new penalties, it issued two critical communications to initiate and enforce administrative penalties against non-compliant trusts. Firstly, the Draft Notice for Public Comment, which was published on 3 December 2025. It proposed fixed-amount monthly penalties for trusts that fail to submit their income tax returns, starting with outstanding 2024 and 2025 tax returns. Secondly, the Media Release: Trusts Filing 2025/2026 filing reminder was issued on 15 December 2025. This served as a strong reminder of the tax season and filing deadlines, making it clear that trusts would face rigorous non-compliance penalties.
SARS waited until the deadline (20 January 2026) for trusts to submit their 2025 tax returns and, as with companies, began issuing final demand letters to trustees in February 2026, referencing the public notice and requesting overdue income tax returns. Trustees had 21 business days from the issue date of the final demand to submit 2024 and/or 2025 trust tax returns. Unfortunately, the letters were issued before the penalties were gazetted. Only on 27 March 2026 was a public notice issued, listing the non-submission of income tax returns by trusts as an instance of non-compliance subject to an administrative non-compliance penalty under section 211 of the Tax Administration Act of 2011. SARS relied on the final demand letters already issued and did not issue fresh letters after the public notice. This was not aligned with prevailing legislation.
SARS issued a communication stating that, given the level of non-compliance, they would allow trustees two more months to become compliant and would only begin issuing penalties from 4 May 2026. When SARS began issuing penalties, the industry challenged SARS, arguing that SARS could not rely on the prematurely issued letters. SARS then communicated this week that they would reverse the penalties as requested.
SARS’s plan
SARS is clearly agitated by the turn of events, having formally announced penalties almost eight months ago and already allowed two additional months (March and April) for trustees to regularise these matters. In its letters issued this week, SARS stated that it will issue a new Final Demand Letter and proceed with administrative penalties only in accordance with the applicable legal requirements. SARS encourages trustees to submit any outstanding Trust Income Tax Returns. It appears there is no more hiding away, as the new Final Demand Letters will be valid.
Given that SARS had no option but to apply the law correctly and reverse the initial wave of penalties, it is to be expected that they will now apply the law firmly and penalise non-compliant trustees. It is anticipated that SARS may, in future, adopt the same process used with individuals and companies to penalise trustees, even if only a single historic tax return remains outstanding. No registered trust with the Master is exempt, regardless of whether trustees label it as a “dormant” or “passive” trust.
Risk for trustees
SARS relies on details of registered trusts from the Master and third-party data providers, such as banks, to identify unregistered trusts. According to Makhubu, “Data is the lifeblood of a tax administration, and we want to use data to zone into trusts and ensure they are as compliant as they can be”. He added that “if compliance still does not come through, then we have to responsibly enforce, and we do intend to heighten our integrated enforcement going forward”.
If a representative taxpayer fails to settle tax obligations, SARS can hold them liable in both their official and personal capacities. SARS may even impose personal liability under Section 155 of the Tax Administration Act in certain circumstances, such as when the trustees pay themselves, beneficiaries, or other creditors rather than SARS, leaving the trust indebted to SARS; or when they engage in fraudulent activities, such as dissipating trust assets (moving or hiding funds) to avoid paying SARS. This risk remains even if the trustees use the services of a tax practitioner, accountant, or administrator, as they remain legally liable for the trust’s tax obligations.
Trustees, accountants and other trust service providers should take SARS seriously and treat the trust as a vehicle that requires much more detailed compliance and paperwork than any other taxpayer. Avoid being caught by SARS.
Moreover, trustees should take their roles seriously and actively manage trusts on a daily basis in line with trust legislation. Trustees should also not lose sight of the fines now imposed for non-compliance under the amended Trust Property Control Act. Traditional, manual processes can no longer suffice.

05/07/2026

SARS is encouraging taxpayers to check their SMS or email notifications and log in via eFiling, the SARS MobiApp or WhatsApp to view their assessments.

03/07/2026

The 2026 Tax Season Opens!

Experience the Power of Done.

https://shorturl.at/ewOvP

03/07/2026

5 Things Big Companies Do That Small Businesses Shouldn’t Copy
Posted by: Bernard Schoeman on26 June 2026
"Small is not a stepping stone. You can move. You can adjust. You can adapt. You can get it done while they're still stuck deciding what to do." (Jason Fried, entrepreneur and author)

When starting a small business, it’s easy to assume you don’t have all the knowledge you need to compete, and that the big, successful corporation next door holds all the keys to success. With their polished org charts, complex strategy documents, and fleets of middle managers, big corporations and their strategies can look like growth to the beginner.

This is a mistake. The truth is, big companies operate within a completely different set of constraints and economies to smaller, founder-run businesses. Understanding which big business strategies could hurt if implemented in your business, is therefore a key to survival.

Hiring for the org chart, not the work
Large corporations often hire ahead of demand. They build out departments, create roles to fill future needs, and staff up in anticipation of growth. They can afford to carry headcount. Smaller businesses cannot.

Many small business owners get caught up in the excitement of expansion, and start hiring to look like a bigger company, or in anticipation of future problems, rather than to solve a specific current issue. They add a layer of management before there's anything to manage, or recruit a marketing team before they've validated what their customers actually want. The result is a payroll that grows faster than revenue, and a business that starts to take strain under the weight of salaries it was never ready to carry. As a new business, it is essential that each hire adds immediate value to the company and can justify their pay cheque from day one. If you are unsure what someone will do in their first 90 days, this is probably a hire you don’t need.

Complexity for the sake of it
Big companies love processes and reporting structures. Everything from ordering printer paper to launching a new product needs multiple meetings, committee sign-offs, and documented procedures. Some of this is necessary when you're coordinating thousands of people across continents… But for a small team, your biggest advantage is agility.

Small businesses thrive on speed and flexibility. Your ability to make a decision at 9am and implement it by lunchtime is a genuine competitive edge over a corporate rival that needs a risk assessment before it can switch toilet paper suppliers. The moment you start building bureaucracy into your own operation (think overly formal sign-off chains, or meetings about meetings) you are denting the very quality that makes you competitive.

Spending unnecessarily on brand before earning the right
A classic mistake many growing startups make, is one that’s also obvious to any experienced business owner the second they walk into the offices. The expensive logo on frosted glass, the branded hoodies, and the slick website are all in evidence – but the pipeline runs thin and the cash flow statement speaks of desperation.

Big companies invest heavily in brand because they have proven revenue streams and established customer relationships. Brand maintenance is a legitimate line item at that scale. For a small business still finding its feet, over-investing in brand before you have a viable business is putting the cart firmly before the horse. Customers care more about whether you solve their problem better than anyone else than they do about your brand. Earn that reputation first. The brand follows from the substance, not the other way around.

Chasing revenue while ignoring cash
Publicly listed companies are accountable to shareholders who want to see top-line revenue growth. That pressure filters through to every level of a large organisation and shapes how it measures success. Revenue is celebrated; profit is secondary. For small and medium-sized businesses, this is a genuinely dangerous mindset to adopt.

In the early days, cash flow will be the ultimate difference between thriving and going bang. A client can owe you a large sum and your business can still fail if that money doesn't arrive in time to cover your wages run.

But still, small business owners routinely chase headline revenue figures, winning bigger contracts, and pursuing growth at all costs without doing the hard work of understanding whether these sales are actually translating into cash flow, and whether the timing of receipts matches the reality of their outgoings. It is vital that you know the real numbers that will affect the day-to-day running of your business. And that you understand the difference between revenue and profit, and between profit and cash in the bank. As your accountants, we are here to help you see this clearly.

Outsourcing the customer service relationship
Enterprise businesses outsource customer service, because economies of scale demand it. For small businesses, this is a critical error, as the relationship between your business and your customers is one of the most valuable assets you possess.

When you outsource your pitches to a big agency, your customer queries to a call centre, or your social media to a junior member of staff who doesn't really understand what you do, you lose the intimacy that made customers choose you in the first place. People buy from small businesses because they feel seen. They want the expert, not the system. Protect that connection carefully.

The bottom line is this: the best small businesses succeed by doing things that big companies structurally cannot. They move fast, know their customers personally, make smart decisions without bureaucracy, and treat every rand as precious. Lean into that while you still have it.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

03/07/2026

Which Trust is Right for Me? Ask a Professional
Posted by: Bernard Schoeman on26 June 2026
"All trusts established in South Africa are required to register with SARS, regardless of whether they have any transactions or income." (SARS)

When Mr and Mrs J set up a Type-A special trust for their eldest son, who is intellectually challenged, their intention was to make certain there would always be sufficient financial resources for his best care, both during and beyond their lifetimes. A special trust was recommended by a professional advisor and with good reason: Type-A special trusts are created “solely for the benefit of a person with a mental or physical disability.”

However, as Mr and Mrs J found out, while Type-A special trusts have very compelling tax benefits, there are also substantial tax limitations. Fully understanding these within the unique personal context of the ultimate beneficiary is essential to ensuring the trust objectives are met over the long-term. And that means relying on specialist and individualised tax advice when considering a trust arrangement of any kind.

Why set up a trust?
A correctly structured trust can be a powerful financial planning tool for business and property owners, wealthy individuals, or families. It can help manage succession, protect assets, provide for children or dependents, navigate estate planning issues and pass on wealth responsibly.

What is crucial is setting up the right structure for the objectives of the particular trust and understanding the consequences – and particularly the tax consequences – of the decisions made.

Which trust is best for you?
There are many different types of trusts in South Africa. For example, an inter vivos (living or family) trust, is created during your lifetime to hold assets such as property, business interests or investments, while a testamentary trust is created through a will (it only kicks in after your death) and is especially important where minor children are involved.

There are also vesting and discretionary trusts, and hybrid trusts that combine the two, as well as a range of specific application trusts like trading (business) trusts, charitable trusts or BEE trusts, to mention but a few.

What about special trusts?
For tax purposes, two types of special trusts are also recognised, the Type-A special trust is intended solely for a person with a mental or physical disability, as in our opening story, and the Type-B special trust created specifically for the benefit of relatives of a deceased person, provided at least one beneficiary is a minor on the last day of the trust’s year of assessment.

The trust types are not mutually exclusive. For example, a trust can technically be both a Type-A special trust and a vesting trust; or both a Type-B special trust and a discretionary trust.

However, the exact trust type really matters from a tax perspective, because Type-A and Type-B special trusts are not taxed in the same way, and both are taxed differently to normal trusts. This should be carefully considered before establishing a trust, and then disclosed when completing the mandatory annual tax returns.

How is income for normal trusts taxed?
In terms of what is called the “conduit principle”, trust income or capital gains may be taxed in the hands of the trust or the beneficiaries, depending on when that income or capital gain vests.

Where the trust itself is taxed, it is taxed at a flat rate of 45%. Beneficiaries are taxed at their personal tax rate on a sliding scale from 18% to 45% and also benefit from various tax rebates. SARS taxes a trust's capital gains depending on whether the gains are retained in the trust or vested to a beneficiary in the same year of assessment. Normal trusts face an effective Capital Gains Tax (CGT) rate of 36% (calculated from an inclusion rate of 80%, which is then taxed at the flat 45% income tax).

Beneficiaries that are individual taxpayers have a maximum effective CGT rate of 18% (calculated from an inclusion rate of 40%) and also qualify for rebates such as the R50,000 annual CGT exclusion, the R3-million primary residence CGT exclusion, and disregarded CGT gains on personal-use assets or compensation for personal injury, illness or defamation.

The special case of Type-A special trusts
Type-A special trusts, on the other hand, are taxed using individual income tax brackets on a progressive sliding scale from 18% to 45%.

Their capital gains inclusion rate is 40%, making their maximum effective CGT rate 18%, lower than for normal trusts and the same as for natural persons. They also qualify for CGT rebates that apply to individuals as listed above. Relief from donations tax on interest-free or low-interest loans to Type-A special trusts also applies.

However, there are some important tax limitations. Type-A special trusts do not qualify for medical tax credits, primary tax rebates, or the annual interest exemption available to natural persons. A Type-A special trust may vest income in a qualifying beneficiary so that the income is taxed in that individual’s hands, enabling the individual to use their own rebates, medical credits and interest exemption.

Bottom line: it’s complicated, so get professional tax advice based on your specific circumstances.

Our tax advice can make all the difference
Whether you’re considering a special trust, an inter vivos trust, or any other structure, the differences in how income and capital gains are taxed, and what tax rebates are allowed, can have a significant impact on the real-world benefit delivered to the trust beneficiaries. The right choice depends entirely on the trust’s objectives, your unique circumstances, and a careful analysis of possible tax consequences.

For specialist, individualised tax advice and professional assistance, contact us.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

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03/07/2026

2026 Tax Season Opens: Experience the Power of Done
Posted by: Bernard Schoeman on26 June 2026
"The Power of Done starts with knowing when to act." (SARS)

The 2026 Tax Season officially opens on 13 July 2026 for the 2025/2026 year of assessment, covering the period between 1 March 2025 and 28 February 2026.

During filing season, taxpayers must complete and submit their tax returns, declaring their income and deductions to allow SARS to determine their final tax liability for the period under assessment.

Dates to diarise

What’s new this filing season
“The Power of Done”: This year SARS is inviting taxpayers to experience “The Power of Done”, a campaign that centres on Auto-Assessments. SARS says that if you agree with your auto-assessment, you don't need to manually file a return or do anything else, truly experiencing "The Power of Done”.
More prefilled data: More taxpayer information from third parties like employers, banks, medical schemes, insurers and retirement funds, is already pre-populated on returns, which means less time spent on capturing data and hopefully fewer mistakes.
Stricter verification: SARS has upgraded its data-matching algorithms. So even if auto-assessed, make sure to double-check that all your data (like deductions and donations) is accurate.
WhatsApp integration: Taxpayers can now receive their Notice of Assessment (ITA34) or Statement of Account (SOA), as well as securely upload supporting documents, directly via WhatsApp.
To be or not to be auto-assessed… Here’s what to do

Rely on our expertise for a hassle-free filing season
This is what we can do for you:

Verify all SARS communications are legitimate to protect you from scams.
Check that all taxpayer and banking details are correct and updated with SARS to facilitate refunds and to prevent identity theft and fraud.
Claim every tax rebate available to you to avoid you paying more tax than required.
Correctly prepare all required documentation early to avoid last-minute delays and to expedite a possible SARS verification or audit.
Check auto-assessments to ensure these are correct before they are accepted.
Ensure that your tax return submissions comply with current regulations.
Meet all submission deadlines on your behalf to avoid penalties.
Our team of seasoned tax professionals is ready to make this filing season a doddle!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

01/07/2026

01/07/2026

Nicola Louw, Tax Manager at Hobbs Sinclair, said reviewing your assessment could help you avoid costly mistakes or missed refunds.