SA Grain May 2017

None of the vested interests are subject to a discretionary

power conferred on any person in terms of which that interest

can be varied or revoked.

Special trusts: A trust solely for the benefit of one or more

persons who are persons with a disability, where such disabil-

ity incapacitates such a person or persons from earning suffi-

cient income for their maintenance or from managing their own

financial affairs.

Primary resident trusts: The loan was wholly or partly used for

purposes of funding the acquisition of an asset, which asset

was used, throughout the year of assessment, by the person

granting the loan or the spouse of that person as a primary

residence and the amount owed relates to the part of the loan,

advance or credit, that funded the acquisition of that asset.

Transfer pricing, Section 31: If transfer pricing is applicable no

deeming of donation will apply – no ‘double taxation’ on the

same event.

Shariah financing: Financing structures that are Shariah

compliant.

Deemed dividend, Section 64E(4): Where the loan was made

to the trust by a company and is deemed to be a dividend by

the company to the trust.

The implementation of the new Section 7C will have negative

consequences for interest-free loans to trusts. We strongly advise

that individuals who find themselves within the ambit of Section 7C

to seek professional advice before making any hasty decisions.

Each case must be judged on its own merits and facts to estab-

lish an appropriate plan of action. Any aggressive structuring in an

attempt to minimise the negative consequences of Section 7C must

be weighed against the General Anti-Avoidance Rule (GAAR).

Trusts are still valuable estate planning vehicles, but careful con-

sideration must be given on how to ‘fund’ trusts going forward.

Lastly, tax should not be seen as the primary driver in any estate

planning endeavour; rather, cognisance should be given to the fis-

cal consequences of the chosen structure and appropriate measures

must be put in place to address any liquidity constraints.

For more information contact Ms Hesna Rheeder at

hesna.rheeder@

pwc.com

or Mr Jan Coetsee at

jan.coetsee@pwc.com

This article is provided by PricewaterhouseCoopers Tax Services (Pty) Ltd for

information only, and does not constitute the provision of professional advice of

any kind. The information provided herein should not be used as a substitute for

consultation with professional advisers. Before making any decision or taking any

action, you should consult a professional adviser who has been provided with all

the pertinent facts relevant to your particular situation.

No responsibility for loss occasioned to any person acting or refraining from acting

as a result of using the information in this article can be accepted by Pricewater-

houseCoopers Tax Services (Pty) Ltd, PricewaterhouseCoopers Inc or any of the

directors, partners, employees, sub-contractors or agents of Pricewaterhouse-

Coopers Tax Services (Pty) Ltd, PricewaterhouseCoopers Inc or any other PwC

entity.

PricewaterhouseCoopers International Limited (PwCIL) network that consists of

separate and independent legal entities that do not act as agents of PwCIL or any

other member firm, nor is PwCIL or the separate firms responsible or liable for the

acts or omissions of each other in any way. No portion of this document may be

reproduced by any process without the written permission of PwC.

May 2017

FOCUS

Money matters and financial services

Special

Time to take action

All future growth is accrued within the trust and because a trust is not

a natural person for estate duty purposes, no estate duty can be levied

on assets held by a trust.