Disputing a SARS Trust Assessment: Step-by-Step Guide

Receiving a SARS assessment that misrepresents your trust’s tax position can be stressful — especially when it includes disallowed deductions, misclassified income, or unexpected penalties. Fortunately, disputing a SARS trust assessment is a formal process with clear steps that trustees can follow to challenge errors and protect the trust’s compliance.

Whether the issue involves Section 7C loan miscalculations, beneficiary income, or capital gains, a properly filed objection with supporting documents can often resolve the matter without escalating it further. Here’s what you need to know.

✅ When Can You Dispute a SARS Trust Assessment?

TrTrusts in South Africa are required to submit a comprehensive ITR12T to SARS each tax year. This return includes detailed disclosures of income earned, distributions made to beneficiaries, capital gains, loan accounts, and supporting documentation for all financial activity within the trust. After reviewing the submitted ITR12T, SARS may issue an assessment (ITA34) that highlights one or more adjustments which could significantly affect the trust’s tax position.

These adjustments may include:

Additional tax liabilities that increase the overall amount payable by the trust
Rejected deductions or expenses due to missing documents, incorrect classifications, or SARS interpretation of allowable costs
Misapplied vested income, where SARS taxes income in the trust when it should have been allocated to beneficiaries
Capital gains reclassification, especially where SARS disputes the timing, calculation, or treatment of asset disposals
Section 7C loan penalties for interest-free or low-interest loans involving connected persons
Interest or underestimation penalties applied when provisional tax payments fall short of SARS’s expectations

If any part of the assessment appears inaccurate or is based on a misunderstanding of the trust’s financial structure, trustees have a legal right to initiate the process of disputing a SARS trust assessment. This involves formally objecting to the specific items in question through the Notice of Objection (NOO) process, supported by clear documentation and well-reasoned justification.

Disputing a SARS trust assessment is not simply about correcting numbers — it’s about protecting the fiduciary integrity of the trust, ensuring fair tax treatment, and maintaining compliance with South African tax law. Trustees must act within the prescribed timeframes, typically 80 business days from the date of assessment, to ensure that their objection is considered valid. A well-prepared objection not only safeguards the trust from undue financial burden but also ensures that beneficiaries are taxed correctly and equitably.

⏳ Time Limits for Filing an Objection

Timing is critical when disputing a SARS trust assessment:

A Notice of Objection (NOO) must be filed within 80 business days of the date the ITA34 assessment was issued.
If the deadline has passed, you must submit a condonation request, explaining the reason for the delay. SARS will only consider late objections if “reasonable cause” can be demonstrated.

🛠️ Step-by-Step Guide to Disputing a SARS Trust Assessment

If you believe a SARS assessment for your trust is incorrect, follow these steps carefully to ensure your objection is valid and effective. Disputing a SARS trust assessment requires precision, supporting evidence, and adherence to SARS procedures.

Step 1: Review the ITA34 Assessment Thoroughly

Start by logging into your SARS eFiling profile and accessing the ITA34 notice issued for your trust. This document outlines SARS’s view of your trust’s tax obligations based on the submitted ITR12T. Review the ITA34 in detail and look for:

Adjusted line items that deviate from your original submission
Rejected deductions or expense claims
Reclassified beneficiary income, where SARS taxes the trust instead of the individual
Capital gains discrepancies, especially from disposals of shares or property
Section 7C interest or deemed donation charges, often triggered by interest-free or low-interest loans

📌 Tip: If the ITA34 does not clearly explain the adjustments, request a formal “Reason for Assessment” through eFiling. This will help you address SARS’s logic directly in your objection.

Step 2: Complete the Notice of Objection (NOO)

To begin disputing a SARS trust assessment, you must file a Notice of Objection (NOO) using the official SARS eFiling system:

Navigate to: eFiling → Disputes → Notice of Objection (NOO)

Ensure you are logged into the trust’s taxpayer profile, not a personal one. When completing the NOO:

Select the correct tax year that matches the assessment
Indicate the specific line items or components being disputed
Provide a clear and concise explanation of why the assessment is incorrect
Reference relevant tax legislation (e.g., Section 25B, Section 7C) and apply it to your case
Upload supporting documentation to substantiate your position

Step 3: Attach Trust-Specific Supporting Documents

A well-substantiated objection is key to successfully disputing a SARS trust assessment. Include detailed and organised records, such as:

Annual Financial Statements signed by trustees
Beneficiary distribution schedules showing amounts vested and dates
Loan account summaries and applicable Section 7C interest calculations
Trustee meeting minutes or resolutions documenting decisions
Bank statements, source documents, or contracts related to income, expenses, or capital gains
IT3(b) and IT3(c) certificates from banks or investment houses

🗂️ Best Practice: Clearly label each document (e.g., “Loan Statement – Beneficiary A”) and refer to it by name in your written objection. This improves SARS’s ability to assess your objection efficiently.

Step 4: Submit the NOO via SARS eFiling and Track It

Once your objection and supporting documents are complete:

Submit the Notice of Objection through the trust’s eFiling profile
SARS will issue an acknowledgment of receipt
Track the progress of your objection in the “Disputes” section of eFiling

SARS typically responds within 60 business days, although this timeframe can be extended if they request further clarification or documentation. Throughout the process, continue monitoring for status changes or communication from SARS.

📝 What Happens After You Submit?

SARS will:

Allow the objection (fully or partially), issuing a revised ITA34
Disallow the objection, giving reasons in writing

If your objection is disallowed, your next options include:

Filing a Notice of Appeal (NOA) within 30 business days
Requesting Alternative Dispute Resolution (ADR)
Escalating the matter to the Tax Board or Tax Court

✅ Most SARS trust assessments are resolved during the objection stage — if your submission is thorough and timely.

Chartered Accountants in Pretoria | Disputing a SARS Trust Assessment

❌ Common Mistakes When Disputing a SARS Trust Assessment

Even with valid grounds, many objections fail due to avoidable errors. If you’re disputing a SARS trust assessment, avoiding the following mistakes is essential to ensuring your case is heard and fairly assessed:

📄 Objecting Without Proper Documentation

SARS operates strictly on verifiable evidence. Submitting an objection without detailed supporting documents — such as financial statements, distribution schedules, or loan records — significantly reduces your chances of success. Always back your claims with solid proof.

📬 Submitting Objections via Email or Post

Only formal objections submitted through the SARS eFiling platform are valid. Sending an objection by email, post, or physical delivery will not be recognised, and your request may be disregarded. Always use the Notice of Objection (NOO) form on eFiling when disputing a SARS trust assessment.

🧾 Misclassifying Income

SARS carefully examines whether income is vested in a beneficiary or retained in the trust. Misclassifying this income can result in incorrect assessments and possible double taxation. Ensure that your financial records clearly distinguish vested income from retained earnings.

⏳ Missing the Deadline

Timing is critical. You have 80 business days from the date of assessment to file your objection. If you miss this deadline, you must submit a condonation request — and SARS will only accept it if you can prove a reasonable cause for the delay. To avoid complications, act promptly when disputing a SARS trust assessment.

✅ Tips for a Successfully Disputing a SARS Trust Assessment

Effectively disputing a SARS trust assessment requires more than just disagreeing with the outcome — it demands a well-prepared, well-documented, and legally grounded submission. Here are key strategies to improve your chances of a favourable resolution:

📌 Reference Specific Line Items and Values

Always refer directly to the line items, amounts, and reasons listed in the ITA34 assessment. This shows SARS that you’ve thoroughly reviewed the assessment and are engaging with it at a detailed level.

⚖️ Use Applicable Tax Legislation

Where possible, cite relevant sections of the Income Tax Act, especially:

Section 25B: For the correct treatment of income vested in beneficiaries
Section 7C: For interest-free or low-interest loans between the trust and connected parties

Citing legislation strengthens your legal argument and shows SARS that your objection is grounded in applicable tax law — a crucial step when disputing a SARS trust assessment.

🗂️ Maintain a Detailed Paper Trail

A complete record of the trust’s activity is vital. Keep:

Trustee resolutions
Distribution schedules
Financial statements
Bank records and supporting documents
Having a clear audit trail helps SARS verify your claims and reduces the risk of the objection being denied due to insufficient evidence.

📞 Respond Promptly to SARS Requests

After submitting your objection, SARS may request additional information. Respond quickly and professionally to avoid delays or automatic dismissal of your case. Timely communication signals that the trust is well-managed and serious about compliance.

👨‍💼 Why Work With a Trust Tax Specialist?

Disputing a SARS trust assessment requires expertise in trust law, tax interpretation, and SARS procedures. Trusts are frequently flagged due to:

Interest-free loans between related parties
Misclassified distributions
Capital gains on fixed property or share disposals

A specialist accountant:

Prepares structured objections backed by accurate accounting
Understands SARS dispute systems and trust legislation
Can escalate matters professionally if ADR or court referral is needed

🛡️ Sparrows Chartered Accountants – Experts in Trust Disputes

At Sparrows Chartered Accountants, we specialise in disputing a SARS trust assessments with precision and professionalism. Whether you’re navigating Section 7C loan disputes, challenging inaccurate capital gains tax (CGT) calculations, or seeking the reversal of penalties, our team is here to support you. We handle the entire objection process — from reviewing your assessment and preparing documentation to engaging directly with SARS — ensuring your trust returns to full compliance with confidence and peace of mind.

Received a SARS assessment that doesn’t reflect your trust’s reality?

Contact Sparrows Chartered Accountants today — and let us help you dispute it effectively, professionally, and with confidence.

Disclaimer: This article is intended for general informational purposes only and reflects the legislation and SARS practices in effect at the time of publishing. Tax laws are subject to change, and individual circumstances vary. Always consult a registered tax practitioner or financial advisor for advice tailored to your situation.