Page 28 - Nexia SAB&T Property and Tax Guide 2025

PURCHASING VIA LEGAL ENTITIES – PRO’S & CON’S
COMPANY
ADVANTAGES 6. Shareholders agreement can neatly regulate the
1. CC, trust, company can be shareholders relationship between the shareholders (subject to
2. Strictly controlled by legislation Companies Act the MOI and Act)
(71 of 2008) as amended 7. A bond may be registered subject to the solvency
3. Can have more than 10 shareholders and liquidity requirements of Section 44
4. Has greater image value than a CC or a trust as a
business vehicle DISADVANTAGES
5. Relatively easy sale of interest through a sale of 1. The costs of annual audit (where applicable)
shares 2. Complex legislation applies, with increased
compliance requirements
CLOSE CORPORATION
ADVANTAGES DISADVANTAGES
1. Management is also represented by members who 1. Membership limited to 10 (only natural persons or
hold interest in the CC trusts)
2. Since 2011, no new CC’s may be registered
TRUST
ADVANTAGES 7. The Trust Property Control Act (no. 57 of 1988),
1. The trust is treated as an entity separate from as recently amended, sets out guidelines for the
the individuals administration of a trust in SA and introduces
2. Assets don’t form part of the insolvent estate in increased responsibilities and liabilities for trustees.
the event of sequestration
3. Strict controls – Trustees accountable to Master DISADVANTAGES
of the High Court 1. Cannot be sold as an entity
4. Special trusts formed for mentally ill or seriously 2. The beneficiaries normally have discretionary rights
disabled, will be allowed CGT exemption which are not assets that can be sold such as
if primary residence (and meets other shares
requirements to qualify) 3. Trustees cannot act until Letters of Authority have
5. Special trusts – taxed at individual rates been issued
6. Trust deed can be set up so as to determine the
manner in which Trustee administers the fixed
property and the Trustee is dutybound to obey
these wishes
Transferring property into a trust should be considered in light of recent tax law amendments – trusts should no
longer be created to simply limit taxes, but may still have other benefits. Each situation should be considered on its
own merits (with the aid of specialists in the field).
APPLICABLE TO ALL ENTITIES
ADVANTAGES DISADVANTAGES
1. Separate legal personality (CC’s and Companies) 1. CGT – where property is held in Company/CC,
2. If shares held in trust, may protect the shares as ordinary trust, and special testamentary trust,
long as not offered as security against a loan no primary residence exemption allowed
3. Shares/Members interests can be sold 2. Dividends tax levied on the shareholder at a rate
4. Continues to exist as an entity even in event of of 20% on the amount of any dividend paid by a
death or resignation of member/shareholder/ company (subject to certain exemptions). The tax is
director/trustee to be withheld by the company paying the taxable
5. Need not be in existence at time of signing dividends and paid across to SARS
agreement (CC’s and Companies) 3. Transfer of members interest, shares – subject to
Securities Transfer Tax at a rate of 0.25% on the
transfer of listed or unlisted securities
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