Page 48 - Nexia SAB&T Property & Tax Guide 2022

The following will be specifically excluded from the above donation provisions:
◆ special trusts that are created solely for the benefit of disabled persons
◆ trusts that fall under public benefit organisations
◆ vesting trusts (in respect of which the vesting rights and contributions of the
beneficiaries are clearly established)
◆ loans used by the trusts to fund the acquisition of a primary residence
◆ loans that are subject to transfer pricing provisions
◆ loans provided to the trust in terms of a sharia-compliant financing arrangement, or
◆ loans that are subject to dividends tax
◆ loans to employee share purchase trusts
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.
OTHER ANTI-AVOIDANCE PROVISIONS
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, and non-residents.
The result of the anti-avoidance provisions are that the income that accrues to the person’s
mentioned above are deemed to be the income of the donor.
CHECKLIST WHEN BUYING OR SELLING A PROPERTY FROM A TRUST
1. Review the Trust deed Review the clauses pertaining to the powers and authority of the
Trustees to act. They must have the requisite capacity to contract on behalf of the trust
regarding the acquisition or disposal of property, or power to obtain a mortgage bond or
pass a mortgage bond over any immovable property held in trust by them.
2. Letters of Authority Trustees must be duly authorised to act in terms of the most recent
Letters of Authority issued by the Master of the High Court, or Master’s Certificate, if the
trustees have changed.
3. FICA Obtain all signing Trustees’ Identity documents, and other FICA documentation.
4. Board of Trustees The Board must be properly constituted. The minimum number of
Trustees required by the Trust Deed must be appointed.
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