Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
SARS’s view is found in paragraph 14.11.5.1 (vesting of an asset through multiple discretionary trusts) of their CGT guide. They explain it as follows:
“Assume that discretionary Trust A’s beneficiary is discretionary Trust B and Trust B’s beneficiary is X, Trust A vests an asset in Trust B which results in a capital gain of R100 being attributed to Trust B under para 80(1). The question arises whether that capital gain can in turn be attributed by Trust B to X in the same year of assessment. Based on the wording of para 80(1), the view is held that Trust B must account for the capital gain, and the vesting of the same asset by Trust B in X will not result in the capital gain of R100 being attributed to X.
The words ‘the trust’ in para 80(1)(a) refer to the same trust in the opening words of the subparagraph, namely, the trust that determined a capital gain in respect of the vesting of an asset. No capital gain will arise in Trust B when it vests the asset in X because under para 38 Trust B acquires the asset for a base cost equal to market value at the time of vesting and its proceeds upon immediately vesting the asset in X are equal to that same market value. Trust B has not determined a capital gain in respect of the vesting of an asset and para 80(1) can therefore have no application.”
Based on the information provided we accepted that it doesn’t relate to the vesting of asset in vesting trust.