Page 14 - Nexia SAB&T Trust Guide 2022

SPECIAL TRUSTS

A trust in South Africa can also be used for another specific purpose, and be
categorised as a “Special Trust”.
For tax purposes the following types of special trusts are recognised:
Special Trust Type A – a trust created solely for the benefit of a person(s) with a
“disability”, as defined in section 6B(1) of the Income Tax Act (no.58 of 1962)*,
where the disability makes it impossible for the person(s) from earning enough
money for their care or from managing their own financial affairs: Provided that –
■ Such trust shall be deemed not to be a special trust in respect of years
of assessment ending on or after the date on which all such persons are
deceased; and
■ Where such trust is created for the benefit of more than one person, all
persons for whose benefit the trust is created must be relatives in relation to
each other.
Special Trust Type A trusts can be testamentary or inter vivos trusts and are some-
times created as a result of a court order in favour of a specified natural person.
In order to be classified as a Special Trust Type A, approval must be obtained
from SARS.
*Disability
A “disability”, as defined in section 6B(1) of the Income Tax Act means – a moderate
to severe limitation of a person’s ability to function or perform daily activities as a
result of a physical, sensory, communication, intellectual or mental impairment.
The disability must be diagnosed by a duly registered medical practitioner, and
that disability must have lasted or has a prognosis of lasting more than one year.
Special Trust Type B – this is a testamentary trust created by a testator by or in
terms of his Last Will and Testament, which is created solely for the benefit of a
person(s) who is a relative of that testator, and such person(s) are alive on the date
of death of that deceased testator (including those conceived but not yet born), and
the youngest of the beneficiaries is younger than 18 years on the last day of the
year of assessment. A trust will cease to be a Type-B trust as from the beginning of
a year of assessment in which the youngest of its beneficiaries turns 18 years old.
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