The ITR12T requires the Trust to disclose expenses incurred iro right of use trust assets by beneficiaries. My client is the beneficiary of a Discretionary Trust. He is currently renting one of the properties of the Trust as his primary residence. The ren
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
The expenses, in this instance, were incurred by the trustees of the trust in the production of the income derived from a rental trade carried on the trust.
Under the heading, “Details of Transactions Applicable to this Person / Beneficiary”, the ITR12T requires of the preparer to mark with an “X” if the beneficiary “Enjoy the right of use of asset(s) retained in this trust”. When it is ticked, it then opens the question:
“Total expenses incurred by this trust in respect of right of use of trust assets by this person during the year of assessment.”
We submit that this envisages expenses incurred, from income of the trust or otherwise, to provide the beneficiary with the benefit of occupying the property. And that would normally mean that it is occupied without any charges. Where the property is occupied in terms of a lease agreement, the expenses need not be disclosed. Technically, the beneficiary uses the property in terms of the rental agreement.