{"id":848555,"date":"2026-01-24T07:00:00","date_gmt":"2026-01-24T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=848555"},"modified":"2026-01-23T17:47:52","modified_gmt":"2026-01-23T15:47:52","slug":"sars-going-after-certain-pension-funds-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/848555\/sars-going-after-certain-pension-funds-in-south-africa\/","title":{"rendered":"SARS going after certain pension funds in South Africa"},"content":{"rendered":"\n

New laws targeting foreign retirement funds are still on the cards for South Africa, while SARS is also expected to crack down on local trusts.<\/p>\n\n\n\n

Recent commentary from law firms ENS and Wright Rose-Innes highlighted how changes in policy direction and stricter enforcement could have significant implications for taxpayers, trustees, and beneficiaries.<\/p>\n\n\n\n

One area under growing scrutiny is the tax treatment of foreign retirement benefits received by South African tax residents.<\/p>\n\n\n\n

Under current tax law, such benefits can be fully exempt from South African tax in specific circumstances.<\/p>\n\n\n\n

The exemption applies where a lump sum, pension, or annuity is received from a source outside South Africa as consideration for past employment performed outside the country. <\/p>\n\n\n\n

For many South Africans who worked abroad and later returned home, this exemption has provided certainty that their retirement savings would not be taxed twice.<\/p>\n\n\n\n

However, this position came under threat during the 2025 draft tax legislation process. <\/p>\n\n\n\n

National Treasury proposed deleting the exemption, which would have meant that South African tax residents would be taxed on foreign-sourced retirement benefits from 1 March 2026. <\/p>\n\n\n\n

According to ENS, the government noted<\/a> that deleting the exemption would prevent double non-taxation of retirement benefits and allow South Africa to exercise its taxing rights under applicable double tax treaties.<\/p>\n\n\n\n

Following strong public feedback, the proposal was withdrawn. However, the issue is far from settled.<\/p>\n\n\n\n

ENS warned that the National Treasury made it clear that a renewed consultative process with stakeholders would follow, raising the expectation that revised proposals may still be introduced.<\/p>\n\n\n\n

ENS cautioned that removing the exemption without careful design could create serious unintended consequences. <\/p>\n\n\n\n

\u201cIn our view, the removal of the tax exemption would result in significant issues which should be considered before this change is legislated,\u201d the firm said.<\/p>\n\n\n\n

One of the main concerns is the risk of double taxation. ENS warned that many foreign retirement benefits are funded out of after-tax income, meaning that taxing them again in South Africa could unfairly penalise returning residents.<\/p>\n\n\n\n

The firm also stressed that South Africa would need a comprehensive legislative framework to properly address foreign retirement benefits and ensure alignment with the taxation of benefits from local retirement funds. <\/p>\n\n\n\n

Without such a framework, taxpayers could face uncertainty, inconsistent treatment, and costly disputes with SARS.<\/p>\n\n\n\n

Cracking down on Trusts<\/h2>\n\n\n\n
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At the same time, SARS is tightening the screws on trusts, an area that has historically suffered from widespread non-compliance.<\/p>\n\n\n\n

Wright Rose-Innes has warned<\/a> that SARS plans to implement administrative penalties for non-compliance with trust tax return submissions from the beginning of 2026.<\/p>\n\n\n\n

\u201cTrustees should take note of this deadline as trusts remain firmly on SARS\u2019s radar,\u201d the firm said.<\/p>\n\n\n\n

All South African trusts are required to register for income tax and submit annual tax returns, regardless of whether the trust is active or dormant. <\/p>\n\n\n\n

Wright Rose-Innes noted that SARS is preparing to conduct deep reviews of trust compliance and will impose penalties where returns have not been submitted.<\/p>\n\n\n\n

These penalties can materially weaken a trust\u2019s financial position and create avoidable legal and administrative costs.<\/p>\n\n\n\n

SARS is also increasing its use of data matching. The revenue service is cross-referencing information from the Master of the High Court with data from third-party providers to identify trusts that are registered with the Master but not with SARS for tax purposes.<\/p>\n\n\n\n

Trustees of such trusts can expect final demands requiring submission of outstanding tax returns. Failure to comply will trigger penalties and further enforcement action.<\/p>\n\n\n\n

The firm cautioned trustees not to wait for SARS to act. Bringing a trust fully up to date can be a lengthy process, especially where years of non-compliance need to be remedied. <\/p>\n\n\n\n

In addition to financial statements, trust tax submissions require accurate beneficial ownership records, trustee meeting minutes, trustee resolutions, and supporting trust documentation. <\/p>\n\n\n\n

Wright Rose-Innes stressed that trustees should begin the process as soon as possible to meet SARS\u2019s 2026 deadline.<\/p>\n","protected":false},"excerpt":{"rendered":"

New laws targeting foreign retirement funds are still on the cards for South Africa, while SARS is also expected to crack down on local trusts.<\/p>\n","protected":false},"author":92,"featured_media":834152,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[10175,853,21727,13263],"class_list":["post-848555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ensafrica","tag-south-africa","tag-the-south-african-revenue-service-sars","tag-wright-rose-innes"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=848555"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848555\/revisions"}],"predecessor-version":[{"id":848724,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848555\/revisions\/848724"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/834152"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=848555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=848555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=848555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}