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As we approach Budget Speech Day on 26 February 2020, many people are wondering what kind of rabbit Finance Minister Tito Mboweni is going to pull out of his hat this year. Most commentators will talk about ‘bracket-creep’, sin taxes and an increase of 1% to the VAT rate. But the Minister needs to start becoming a little more creative.
A trust is a legal arrangement, where assets are held by one party (the trustee) for the benefit of another (beneficiary) as instructed by the owner (trustor/settlor). Recently many people have started to question the usefulness of trusts, given that the tax benefits afforded to trusts in the past, have eroded over time.
Subject to any applicable exemption, donations tax is payable on the value of any property disposed of under any donation. With effect from 1 March 2018 an amendment to section 64(1) of the Income Tax Act, 1962 (the Act) introduced a dual system for donations tax.
The saying goes that we should pay Caesar what he is due and not what he demands. To achieve this in tax planning, estate planners use donations as one of the ways in which to effectively and legally help individuals reduce the taxable values of their estates. Donations of up to R100,000 per year can be used to reduce estate duty.