Page 36 - Nexia SAB&T Trust Guide 2024

OTHER LEGISLATION AND TRUSTEES

■ The Financial Institutions (Protection of Funds) Act (no. 28 of 2001) –
intends to provide for, and consolidate the laws relating to the investment,
safe custody and administration of funds and trust property by financial
institutions.
■ Income Tax Act (no.58 of 1962) – defines a trust as “any trust fund
consisting of cash or other assets which are administered and controlled by a
person acting in a fiduciary capacity, where such person is appointed under a
deed of trust or by agreement or under the Will of a deceased person.”

The Income Tax Act views a trust as a “person” for tax purposes, and
accordingly all trusts must be registered with the SARS. It is the duty
of the trustees or representative taxpayer(s) of the trust, to register the
trust for income tax purposes.

■ Various taxation sections and anti-avoidance measures have been introduced
relating to trusts.
■ Estate Duty Act (no.45 of 1955) – Section 3(3)(d) of the Estate Duty Act is
relevant where the trust instrument contains a provision that empowers the
deceased, immediately before his death, to:
■ Appropriate or dispose of property held in the trust.
■ Revoke or vary the provisions of any donation, settlement, trust, or other
disposition made by him to the trust, for his own, or his estate’s benefit.
In addition, a trust deed may typically contain clauses that attempt to
protect the estate planner, such as the inclusion of a casting vote, or a
testamentary reservation. Such clauses may compromise him, and the
trust property, as a result, may be included in the estate of the deceased
as deemed property and attract estate duty. The fact that the deceased
had the ability to deal with the assets in the way envisaged in the Act, the
day before he dies, will result in the assets being included in the estate of
such a person upon death.
34