SARS’s disallowance of losses distributed from trust to beneficiary

On 18 March 2021, the Supreme Court of Appeal delivered judgment in the case of Massmart Holdings Limited v The Commissioner for the South African Revenue Service. The case dealt with losses which were incurred within the broader Massmart group in respect of the investing of equity instruments as part of an employee share incentive scheme.  The mechanism of the scheme was that shares allocated to the designated employees would be […]

Section 7C of the income tax act explained

What is section 7C? This section of the Income Tax Act is an anti-avoidance measure aimed at transactions between connected persons and trusts, where a trust is funded by low interest or interest-free loans. This is usually done to ensure that assets form part of the trust’s capital, and the funder (who is usually a […]

Who’s watching the watchmen?

Ensuring their children are cared for when they pass away is one of the primary reasons people draw up a will. But what happens when the best interests of the children that are left behind are not at the forefront when an estate is administered and maintenance needs to be paid? This is, unfortunately, a […]

Employee trust 101

Binding Private Ruling 330 (“BPR330”) was issued on 3 October 2019 and relates to the tax implications arising from distributions of dividends and other amounts from an employee trust to beneficiaries on the termination of their employment. The taxpayer (a resident trust) was established for the benefit of the black permanent employees of Company A. […]

Special trusts

The Income Tax Act[1] includes specific provisions for “special trusts”. These trusts are taxed on the same sliding scale applicable to natural persons, which could be lower than the current 45% flat rate applicable to conventional trusts. Capital gains tax (“CGT”) is also lower within a special trust, at a maximum rate of 18% compared […]

Using a trust for estate duty purposes

Trusts are popular mechanisms through which individuals often structure their affairs to ensure efficient administration of their estates when they should one day die.  One of the many advantages of using a trust is of course that it continues to ‘live on’ despite the fact that any one individual may have died.  This in itself […]

Proposed amendment to the taxation of trusts

National Treasury published its much anticipated proposed annual amendments to tax legislation earlier in July. This year the proposed amendments were widely anticipated to shed led on Treasury’s proposals on how to address the perceived abuse of the trust form specifically going forward, especially as relates to the now well known ‘conduit pipe’ principle (in […]

Taxation of trusts

In the budget speech during February 2013 the minister of finance mentioned that the taxation of trusts will come under review to control abuse. In the 2013 budget review published by National Treasury the following was said regarding the taxation of trusts. To curtail tax avoidance associated with trusts, government is proposing several legislative measures […]