Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

Trust Formation

Reply
Copper
Regular Contributor
Hi Guys. Im busy starting an inter vivos trust. What assets etc are recommended to be moved in here. Can shares or shares in property be transferred as well. The way I understand it, you can transfer 100k into the trust without attracting taxation.
0 Kudos
Reply
6 REPLIES 6
partridge
Super Contributor
If you are doing this without comprehensive( note this last word) professional advice then you are travelling down a dangerous road - and asking this forum( with due respect to those who might proffer answers or experience ) is simply obtaining at best a crowd view and at worst... well - you tell me? I am sure you know this but inter vivos trust "benefits" and prior relied on outcomes are almost 100% certain to be negatively affected by income tax changes ito the Davis tax committee feedback and directions they and treasury want to set , and treasury needs money - which means...increase the tax take on trusts and estates. These changes in particular will apply to trading trusts ( which are a bad legal and commercial joke ) and likely mean the famous conduit pipe principle will become an either or - and if this happens it will knock the feet out from under discretionary trusts: and as these are a major reason for having a trust in the first place I am not holding my breath for their future use. In fact I see them in decline.
0 Kudos
Reply
Bchip
Frequent Contributor
I think what partridge is trying to say is be very careful with, trusts :P

Trusts are heavily taxed and often not the best vehicle
There are specific circumstances where they work,
(like certain structures for estate planning), but because
they are so targeted and incur heavy fees often its not a good idea.
Thats why you need to speak to a professional financial advisor.

To answer the question you can transfer anything into a trust, however there are different tax consequences.

The 100k you are referring to is referred here:
http://www.sars.gov.za/TaxTypes/DonationsTax/Pages/default.aspx
0 Kudos
Reply
Preston
Super Contributor
Copper, get your hands on the latest Silke Tax Handbook. There is a chapter within the handbook/textbook that deals comprehensively with the tax implication of the various trust and what you can or cannot donate to a trust.
0 Kudos
Reply
geordie1
Super Contributor
lots of negative comments and press around trusts-not sure its as gloomy as its portrayed .agree get independent advice .my father set up a family trust around 20 years ago and I am a trustee and a beneficiary(although I have never had any benefit so far).we have made regular donations and the fund was left assets in will.it has grown significantly and my kids school fees and much more have been paid by trust saving me a lot of money .there is admin involved and accountant fees and some regular overseeing is required .I am also happy to know that when I die assets in the trust will not attract any death tax.I do worry about potential changes to legislation but having said that it as certainly worked for my family .also nice to know that if I or any of my family fall on hard times the trust can step in and help .overall I would say I am real happy that my dad set this up
0 Kudos
Reply
partridge
Super Contributor
Geordie Lad. "That was then and this is now". Benefits from trusts in RSA are history as the very strong probability is that you will not be able to disperse income and therefore tax liability between beneficiaries where you are talking about a discretionary trust. Moreover from an estate pegging point of view SARS are already engaged in a more aggressive application of Section 3(3)(d) and that is before the DTC have beefed it up. So the REVERSE of the coin is that not only will income tax savings in discretionary trusts become a past advantage but that the DSICRETIONARY TRUST settlor will not achieve pegging of his transferred assets. As a professional I find the DTC approach a joke - but then I am not making it - they are.( they honestly argue that CGT is "not a wealth tax" -I mean is that serious(???) - NO THEY SAY "ECONOMISTS say its not a wealth tax".( One thing I DO know is that it is a tax on inflation NOT capital GAINS but acknowledging that would be to their disadvantage..)) - DTC and treasury will make sure ( if they want taxes = and they do ) of beefing up the E Duty admin - which is the weak point as things stand. I hasten to add that the above does not constitute advice... So don't look at Silke( its not about the future) - go to the cutting edge and get proper advice.
0 Kudos
Reply
geordie1
Super Contributor
thanks for input I have had advantages for the last 20 years so whom am I to complain -I do know that tax authorities do not like trusts and that they are and have tried to curtail certain practices that are obvious tax avoidance schemes -I remain hopeful that the trust will continue to serve my family well in the short to medium term-time will tell.certainly do not feel there is a need to close it down.
0 Kudos
Reply