18/08/2026
THE MYTH BUSTED: THE TRIO OF SARS FIDUCIARIES
SARS tax exemption application and the three ‘fiduciaries’:
Historically, the SARS documents which were required to be submitted with tax exemption applications, referred to those who signed them as ‘fiduciaries’. And, as those forms only had space for the details of three people and their signatures, only three of these ‘fiduciaries’ provided their details, and gave an undertaking (on a form called the EI2) that, if the founding document of the organisation did not contain the clauses required by section 30 of the Income Tax Act, they would ensure that it abided by those provisions.
In the Income Tax Act, 1962, the section which deals in detail with public benefit organisation (PBO) status, has this requirement in s30(2)(b)(i)
[A PBO is] required to have at least three natural persons, who are not connected persons in relation to each other, to accept the fiduciary responsibility of such organisation;
The Income Tax Act does not define ‘persons [who have] fiduciary responsibility’ but it does not need to, as the idea of a ‘fiduciary’ is well established and understood in our law.
What/who is a fiduciary?
A “fiduciary” is simply someone who holds a position of trust, someone who takes care of the property or interests of another. The word ‘fiduciary’ comes from the Latin ‘fiducia’, which means ‘confidence, trust, assurance’.
Those who are in a custodial position of trust are under a ‘fiduciary duty’.
All trustees of trusts, directors of companies and governing boards of voluntary associations are under this duty. The nature of the duty of those who hold these roles is established under common law, and has been incorporated into statutes such as the Companies Act 71 of 2008 and the Trust Property Control Act of 1988.
(What many do not realise is that it is not only those who are official members of boards who are under a ‘fiduciary duty’. Employees are under a fiduciary duty to their employees, agents to those they act on behalf of, lawyers to those they represent: anyone who is taking care of the assets or interests of another is under the fiduciary duty.)
The essence of the fiduciary duty is that one is legally bound to act in good faith, with loyalty, and in the best interests of another party, avoiding conflicts of interest and personal gain at the expense of those they serve. A fiduciary is required to apply the degree of care and skill in the ex*****on of their duties as may reasonably be expected of a person taking care of the property or affairs of another.
The fiduciaries undertaking to SARS:
From the year 2000 (when the new PBO tax exemption became law) until an amendment in 2014, Section 30(4) of the Income Tax Act provided that, if the founding document of an organisation making an application for tax exemption did not contain the clauses made mandatory by section 30(3)(b), the organisation was ‘deemed’ to comply if it submitted an undertaking to comply. This undertaking was form EI2, and was signed by the same three ‘fiduciaries’ who signed the main application form.
After 2014, when the law changed to make the ‘deemed to comply’ provision only applicable to those who could not amend their founding documents (will trusts and branches of foreign organisations) the EI2 form continued to be routinely submitted and accepted by SARS for all applications, and the SARS exemption letters regularly gave a date after approval date by which exempt organisations of all types needed to amend their founding documents if they did not contain the relevant clauses. (This continuation of acceptance of the EI2 was practically very useful to those making applications. During a time when SARS typically took 4 to 6 months to process applications, avoiding the additional delay of first amending the founding document was often important to applicants for the status.)
It is from this EI2 undertaking and fact that the forms give room for only three of those on the board/committee/governing body to sign, that the myth of the “3 SARS fiduciaries” arose. Because of the forms, there are many who believe that only those three whose names and signatures were on the EI1 and EI2 forms, were responsible to SARS for the organisation’s adherence to the provisions of the relevant sections of the Income Tax Act.
Who is responsible to SARS?
Even during the period 2000-2014, when the EI2 form required three people to sign it to declare that the organisation would comply, these three were never doing so alone and were never under a greater duty or burden than those left off the form.
Although section 30(4) refers to section 30(3)(b)(i) which requires that the board/ committee/ governing body should be made up of at least three’ unconnected (not related to each other) people who ‘accept fiduciary responsibility of such organisation’, in my view it is not saying that only three of those who are on the board/committee/governing body ‘accept the fiduciary responsibility. It is clear in our law that all of the people appointed a board of an organisation are under a fiduciary duty and so are ‘fiduciaries’.
The past signing of the SARS EI2 form did not increase or amplify the standard fiduciary duty but merely listed and identified three of the ‘fiduciaries’.
The three who signed the document gave an undertaking that the organisation would be administered in compliance with the SARS rules set out in the EI2 document. In my view this undertaking was given by these three not as individuals, but as board members, and so on behalf of the organisation as a whole.
It is important to note that it is now, and has always been, a requirement of PBO status that the SARS rules are incorporated in the founding/governing document (constitution/ trust deed/ memorandum of incorporation (MOI)) of the organisation. All of those who are directors/trustees/committee members are bound by the provisions of the founding document and must exercise their powers strictly in accordance with its provisions.
Therefore all who serve an organisation, whether they are on the board or are employees or other officers of the organisation already have to abide by the constitution/ trust deed/MOI, so the burden of compliance with the SARS provisions is not, and has never been, only on the trio who may have signed the EI2 form, but on all who are under a fiduciary duty to the organisation and its ultimate beneficiaries.
