Page 30 - Nexia SAB&T Estate Planning Guide 2024

n loans to a qualifying employee share purchase trust
The lender may utilise the annual donations tax exemption of R100 000 (or
remaining portion if applicable) against this deemed donation.
No deduction, loss, allowance or capital loss may be claimed in respect of the
reduction, waiver or other disposal of such a loan, advance or credit by the lender
and will thus have no tax benefit for the lender.
Loans by a natural person or a company to a company is also subject to donation
tax on the same basis if 20% or more of the shares of the company is held
directly or indirectly by a trust (or beneficiary of trust or spouse of beneficiary).
Preference shares issued by a company are also regarded as loans for this donation
tax calculation. As a result the continuous shareholding by trusts in operating
companies might have to reconsidered due to the potential negative consequences
of donation tax levied on interest-free and low-interest loans to these companies.
Other anti-avoidance provisions for trusts
Anti-avoidance provisions exist to combat the use of trusts for income splitting
and tax avoidance schemes. These provisions will normally be applicable where
income accrues to a person other than the donor as a result of a donation,
settlement or other disposition made (i.e. interest free loans). These provisions
may apply where income accrues to the following persons:
■ The donor’s spouse
■ A minor child of the donor
■ The trust to whom the donation, settlement or other disposition has been
made
■ Non-residents
The result of the anti-avoidance provisions are that the income that accrues tothe
person’s mentioned above are deemed to be the income of the donor.
Section 3(3)(d) of Estate Duty Act
n Where an asset is transferred to a trust during an estate planner’s lifetime,
yet the estate planner, as trustee of the trust retains such power as would
allow him to dispose of the trust asset(s) unilaterally for his own or his

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