Page 25 - Nexia SAB&T Estate Planning Guide 2024

n At least one independent outsider trustee should be co-appointed as trustee
to every trust in which (a) the trustees are all beneficiaries and (b) the
beneficiaries are all related to each other.
n A trustee can be a beneficiary of a trust, but a sole trustee may not also be
a sole beneficiary of a trust, as a trustee by definition holds and administers
property for some person other than himself.
Taxation of trusts
A trust must be registered for taxation as soon as it has been set up. Trusts are
divided into two categories for taxation purposes:
Special trusts All other trusts
Taxed at individual tax rates (the tax rates for natural Taxed at 45% income tax
persons for the 2025 year of assessment is between rate (for the 2025 year
18% to 45%). of assessment).
Primary rebate, and interest and medical tax credits
do not apply.
Special trust Type A Special trust Type B
Capital gains tax: Capital gains tax: Capital gains tax
treated as individual, with treated as individual, inclusion rate of 80%
capital gains tax inclusion with capital gains tax with effective rate of
rate of 40%, capital gains inclusion rate of 40%, 36% of gain to be
tax primary residence otherwise treated the added to the taxable
exclusion allowed if same as all other trusts. income of the trust.
meets criteria, and annual
exclusion of R40 000
allowed.

Income tax tips on trusts
n Trustees may create tax efficiencies based on the timing and amounts of
distributions made to beneficiaries.
n Where income received by the trust is distributed out to the beneficiaries
within the same tax year, it is treated, for tax purposes, as if it had never
been received by the trust, but rather directly by the beneficiaries. It is

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