Die gevolge van kapitaalwinsbelasting by die vermindering of aflossing van 'n skuld / deur M. Strydom
The decision of an estate owner to employ a trust as an estate planninginstrument normally involves the disposal of all or part of his growth assets tothe trust. This is done to ensure that the value of such growth assets ispegged down in his personal estate, whilst any growth in the assets occurs inthe trust. The objective is to minimise any estate duty that will be payableafter his death. The transfer of such assets and the concomitant negotiationof the settlement of the purchase price are normally agreed to occur on loanaccount which will be repayable on demand.Subsequent to the disposal of the assets, it is a well established estateplanning technique for the estate owner to reduce the loan account byannually waiving R30 000 of such loan in favour of the trust. This results inreducing the debit loan (asset) in the hands of the estate owner and therebyalso improving his position from an estate duty point of view. The liability(credit loan) of the trust is thereby annually reduced. Because an individualcan donate R30 000 annually free of donations tax, no additional donationstax liability will be incurred when applying this technique.Most estate owners that have applied the abovementioned technique, includein their will a provision whereby they bequeath any outstanding loan from thetrust at the date of the testator's death, to the trust as a legatee.On 1 October 2001 South Africa entered into a new tax dispensation with theintroduction of capital gains tax (CGT). Comprehensive legislation wasincluded in the Income Tax Act (8th schedule) to regulate this new form oftaxation. Paragraph 12(5) of the 8th schedule specifically stipulates that areduction or waiver of a loan/debt will attract CGT.Therefore the above mentioned techniques of donating a portion, andsubsequently bequeathing the outstanding loan amount to a trust suddenlybecame the target of SARS' close scrutiny from a CGT perspective. Hence, itwas no surprise that the first High Court decision on CGT had recently beendelivered in this regard.The purpose of this dissertation is to investigate and scrutinise, not only thedecision in the abovementioned court case, but also the various opinions andarguments raised on this topic. The submission is that the findings andconclusions of such an investigation should enable those involved in estateplanning and the preparation of wills to be wary of the CGT risks attached tothe abovementioned techniques and to avoid the pitfalls. Certainrecommendations and conclusions to achieve the same estate planningresult, are proposed in this dissertation. Certain suggestions were also madewith regards to the wording of provisions to be included in a will in order tobequeath a loan or debt to a trust without the risk of attracting unforeseenCGT.
Year of publication: |
2005
|
---|---|
Authors: | Strydom, Marlize |
Subject: | Trust | Capital gains tax | Estate duty | Waiver of a debt | Estate planning | Income tax | Donation | Debtor | Creditor |
Saved in:
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