When the spouse dies, the will says that the assets must be transferred from the testamentary Trust to the IV Trust – one year after the death of the spouse. Is any capital gains tax payable and then if payable, by who?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
We are not sure that we understand the facts correctly. The uncertainty lies in the statement that “the assets must be transferred from the testamentary Trust to the IV Trust”.
It is SARS’s view (see paragraph 14.11.5.1 (Vesting of an asset through multiple discretionary trusts) in their CGT guide), based on the wording of paragraph 80(1), that the IV Trust must account for the capital gain, and the vesting of the same asset by the IV Trust B in a beneficiary will not result in the capital gain of R100 being attributed to the beneficiary.
Th next comment assumes that the assets are transferred from the estate to the testamentary trust and then a year later to the IV trust. The base cot of the assets in the testamentary trust will then be the market value at date of death and the capital gain would then be the market value one year later less this base cost.