How will interest free loans to Trusts be taxed from 1 March 2017?
Important:
This answer is based on tax law for the year ending 28 February 2018.
Answer:
It is not the interest free loan that will be taxed.
The matter is dealt with in section 7C of the Income Tax, and the effective date is 1 March 2017 (as you say). It applies in respect of any amount owed by a trust in respect of a loan, advance or credit provided to that trust before, on or after that date. See Act No. 15 of 2016 - Taxation Laws Amendment Act, 2016.
In principle, the difference between the amount incurred by that trust, during a year of assessment as interest in respect of that loan, advance or credit and the amount that would have been incurred by that trust at the official rate of interest (as defined in paragraph 1 of the Seventh Schedule) is treated as a donation made to that trust by the person on the last day of that year of assessment of that trust.
Section 7C also deals with a disposal, including by way of a reduction or waiver; or the failure, wholly or partly, of a claim for the payment, of any amount owing in respect of a loan, advance or credit.
It is best to read section 7C.