Page 57 - Nexia SAB&T Estate Planning Guide 2024

Capital gains tax and roll-overs
n All assets that pass to a surviving spouse (either by way of a Last Will and
Testament, or by intestate succession) are subject to “roll over” relief.
n This means that capital gains tax is postponed until the surviving spouse
disposes of the assets during his or her lifetime or at death- the capital gain
is then determined from the date of acquisition by the first dying spouse and
the base cost at such disposal is the base cost as incurred by the first dying
spouse.
Capital gains tax and the discretionary trust
n As soon as a beneficiary has received a vested right to an asset through the
exercising of the discretion of the trustee(s), this will be a deemed disposal
and capital gains tax will be payable on the gain.
Capital gains tax and donations
n A donation may be subject to both donations tax and capital gains tax, as a
donation constitutes a disposal.
n Where a person donates an asset to another, or for a consideration not
measurable in money, or to a person who is a connected person in relation
to that person for a consideration that does not reflect an arm’s length price,
then:
u The donor must be treated as having disposed of the asset for proceeds
equal to the market value of the asset at the date of disposal and the
person who acquired the asset must be treated as having acquired it at a
cost equal to that market value.
n Donations between spouses are subject to roll-over relief.
n A donation which takes the form of writing off a debt which is regarded as
gratuitous in nature, and therefore regarded as a donation, will not also
be subject to capital gains tax. This will also apply to the utilisation of the
annual R100 000 donation tax exemption to reduce a debt. This is important
to bear in mind when drafting a Last Will and Testament, as if a beneficiary
is relieved of an obligation to repay a loan to the deceased estate in the Will,
there will not be a capital gain in the hands of the beneficiary if the debt in
question was included as property of the testator for estate duty.

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