Page 29 - Nexia SAB&T Estate Planning Guide 2024

beneficiary uses the property mainly (more than 50%) for domestic (that is,
residential) purposes.
On disposal of personal-use assets by Special Trusts, capital gains or losses thereon
may be disregarded for Special Trusts Type A, but not for Special Trusts Type B.
A Special Trust Type A may disregard capital gains or losses on compensation for
personal injury, illness, or defamation of the beneficiary of that trust, but not for a
Special Trust Type B.
Only a Type-A Special Trust is excluded from the application of section 7C – not
Type B Special Trust.
E Interest-free and low-interest loans to a trust
With effect 1 March 2017 loans made to a trust by
n a natural person, or
n at the instance of that person, a company in relation to which that person
is a connected person, and where that person or company is a connected
person in relation to the trust

an amount, calculated as the difference between the amount of interest
incurred by the trust (if any, otherwise nil) and the interest that would have
been incurred by that trust had the official rate of interest been charged on the
loan, will be a continuing, annual donation for purposes of donations tax, made
by the lender on the last day of the year of assessment of the trust

The following will be specifically excluded from the above donation provisions:
n special trusts that are created solely for the benefit of disabled persons
n trusts that fall under public benefit organisations
n vesting trusts (in respect of which the vesting rights and contributions of the
beneficiaries are clearly established)
n loans used by the trusts to fund the acquisition of a primary residence
n loans that constitute affected transactions and are subject to transfer pricing
provisions
n loans provided to the trust in terms of a sharia-compliant financing
arrangement, or
n loans that are subject to dividends tax

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