BEL 300 Trusts Legislation and additional lecture slides

Trusts -South African tax

1. Special Trust
Inter vivos or Testamentary
BF = suffers from mental illness
/ serious physical disability
- prevents him/her from
earning income / managing
own affairs
More than one BF:
- all must be BFs with disabilities
AND relatives
Testamentary
BF = relatives of deceased;
- On the date of death – alive
or conceived; and
- Youngest BF < 18 years old

2. s25B(1) and (2)

3. S7(1)
If BF dies amounts will fall into the estate of BF – BF
has a vested right!

4. S7(9) and s7(10)

5. Who do we tax?
Section 7(2) -Spouses
Trust
Reason for donation = 
reduce tax

7. Who do we tax?
Section 7(3) –Parent and minor
Trust

9. Who do we tax?
Section 7(3)
What if????
Trust
Section 7(3) 

10. Who do we tax?
Section 7(4) –Cross donation: Parent and minor
Of any person 
(Parent)
Minor child/ stepchild
Any other person
Family

12. Who do we tax?
Section 7(4) –Cross donation: Parent and minor
Of any person 
(Parent)
Minor child/ stepchild
Any other person
Family
Trust

13. Who do we tax?
Section 7(4) –Cross donation: Parent and minor
Of any person 
(Parent) Minor child/ stepchild
Any other person
Some other consideration
Trust

14. Who do we tax?
Section 7(4) –What if ??????

15. Who do we tax?
Section 7(5) –Stipulation or condition
Only applies to retained amounts in trust
Trust

16. The condition may have been
imposed by the donor or another
person
Examples of conditions:
- may be that a certain age must be
reached,
- the BF must marry,
- the BF must successfully complete
a degree,
-the trustees must exercise a
discretionary power to pay
retained income to beneficiaries.
An unvested amount retained
in a discretionary trust, which
arose from a donated asset,
will therefore be taxed in the
donor’s hands since it has not
vested in a beneficiary!
The donor is subject to tax only until the fulfilment
of the condition or his death
- It is irrelevant if the person who imposed the
condition is still alive.

17. Who do we tax?
Section 7(5) –Stipulation or condition
Only applies to retained amounts in trust
If BF have vested 
right but payment is 
merely delayed then 
s7(5) will not apply. 

18. Who do we tax?
Section 7(6) –amounts vested that could have been revoked
Trust

20. Who do we tax?
Section 7(7) –donation of the right to income
Trust

22. Who do we tax?
Section 7(8) –Resident (donor) benefiting a non-resident (BF)
Trust

24. Who do we tax?
Section 7(8) –Resident (donor) benefiting a non-resident (BF)
Trust