Trust sells bare dominium property with a gain of R12 000. This trust is a residence of south africa. The beneficiary however is a non-residence. Can we distribute the gain of R12 000 to the beneficiary and the beneficiary still qualify for the 40 000 exe
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We accept that when you refer to “can we distribute the gain of R12 000 to the beneficiary”, you are referring to the trustees and that they have, in terms of the trust deed, a discretionary power to vest the capital gain in the beneficiary (ies). We also accept that the beneficiary is not a resident of the RSA, either because he or she is exclusively deemed to be a resident of a treaty country or ceased to be ordinarily resident in the RSA. The 183-days absence from the RSA has got nothing to do with this. The furnishing of returns of income in the RSA has also not got any relevance.
We submit that paragraph 80(2) applies in this instance and that the capital gain, once vested, is in fact not disregarded in the trust. It is therefore ‘taxed’ in the trust.