A discretionary trust is registered in SA, owns property and runs a farming business. Its trustees or the majority thereof, are non residents and therefore its place of effective management is arguably not in SA. Can it be deemed to be a non resident trus
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
You must consult the double taxation treaty, but it is likely that paragraph 4(3) would apply and would read as follows:
“Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.”
Paragraph 1 of the treaty would indicate when dual residency applies – typically it is liable to tax.
The trust then ceases (or ceased) to be a resident of the RSA when it is exclusively deemed to be a resident of the RSA. Section 9H(2) applies to a person (other than a company) and indeed will result in a capital in respect of the assets of the trust, other than immovable property in the RSA – but see section 9H(4) for the specific detail.