Microlearning Course: Taxation of Trusts
Overview
This two-part microlearning course provides an in-depth understanding of the taxation of trusts in South Africa.
Part 1 lays the foundation by covering the legal requirements for a valid trust structure, the roles of donors, trustees and beneficiaries, and the different types of trusts like discretionary, vesting, bewind and special trusts.
It explains how trusts are capitalised through donations or loans, detailing the tax implications of each method including Section 7C rules on low-interest loans. It also covers provisional tax obligations for trusts and the flat income tax and capital gains tax rates applicable.
Part 2 delves deeper into differentiating between attribution, distribution and vesting of trust income and gains. It provides a thorough explanation of the relevant tax legislation like Sections 7, 25B and 26A dealing with attribution rules, taxation of distributions, vesting and taxpayer responsibilities.
This Micro Learning Course is based on tax law for the year ending 28 February 2025.
Course content
Part 1:
Understanding the different types of trusts.
- Exploring how trusts can be capitalised and the consequent impact on the taxation of income and capital gains, as well as the responsible party for tax payment.
- Discussion on donor funding and the calculation of Section 7C tax liability.
- Provisional tax and trusts
Part 2:
- Differentiating between attribution, vesting, and distribution, and providing guidance on computing each amount.
- The conduit principle.
- The trustees’ responsibilities with regards to vesting / distributing to beneficiaries and the importance of a paper trail.
Course content Additional Material:
- Video 1: Taxation of Trust - Part 1
- Video 2: Taxation of Trust - Part 2
- Slides - Part 1: Taxation of Trust
- Slides - Part 2: Taxation of Trust
- Additional resource: 2017-02_CHM-directive
- Additional resource: IT144-Declaration-by-Donor-External-Form
- Additional resource: LAPD-IT-G08a-List-of-Qualifying-Physical-Impairment-or-Disability-Expenditure-Effective-1-March-2020
- Additional resource: LAPD-LPrep-Draft-2014-72-Draft-Guide-on-Taxation-of-Special-Trusts
- Additional resource: Legal-Pub-IRT-03-Interest-Rates-Table-3
Competencies developed in this Micro Learning Course
- Understanding the different types of trusts
- Understanding the various tax types affecting trusts, along with the related parties such as funders/donors and beneficiaries.
- Understanding why trusts are considered taxpayers of last resort.
- Understanding the conduit principle and how to determine the net taxable income and/or capital gain to be vested/distributed.
- Understanding what taxpayers need to disclose regarding income/capital gain and when.
- Ability to work through calculations to determine the amount of income/capital gain to be attributed, vested, and/or distributed.
- Understanding the trustees’ powers and their responsibilities towards beneficiaries, highlighting the importance of maintaining a paper trail.
- Understanding the tax practitioner’s responsibilities and obligations to ensure full and proper disclosure for respective taxpayers.
What's Included:
Taxation of Trusts - Different Types of Trusts
Overview This video provides an overview of the fundamental requirements for a valid trust structure, such as how the trust was formed, ownership of assets, beneficiary rights, trustee powers, and tax classification. It explains the conduit princi ple which states that income retains its nature when passing through a trust in that year of assessment. The video differentiates between attribution, distribution, and vesting of trust income/gains. It covers the computation of taxable amounts for attribution to the donor, distribution to beneficiaries, and amounts taxed in the trust itself under different scenarios. Examples illustrate the calculations and tax implications. Trustees' reporting responsibilities and documentation requirements are also discussed. This video is based on tax law for the year ending 28 February 2025. Video Content Understanding the different types of trusts. Exploring how trusts can be capitalised and the consequent impact on the taxation of income and capital gains, as well as the responsible party for tax payment. Discussion on donor funding and the calculation of Section 7C tax liability. Provisional tax and trusts. Competencies Developed in this Micro Learning Course Understanding the different types of trusts Understanding the various tax types affecting trusts, along with the related parties such as funders/donors and beneficiaries. Understanding why trusts are considered taxpayers of last resort. Understanding the conduit principle and how to determine the net taxable income and/or capital gain to be vested/distributed.
2 Hours | R195.00
Cheryl HowardTaxation of Trusts - Part 2
Overview This video recaps the key factors that determine a valid trust structure. It delves deeper into the conduit principle and how it impacts the tax treatment of annuities received from trusts. The video thoroughly explains Sections 7, 25B, 2 6A and other provisions dealing with attribution rules, taxation of distributions and vesting, and the taxpayer's responsibilities. Comprehensive examples demonstrate calculating attribution, distribution, vesting, and associated tax liabilities for donors, beneficiaries, and the trust. It covers trustees' duties in documenting resolutions, notifying beneficiaries, and maintaining records. The presentation also guides on financial statement disclosures related to trust taxation for practitioners. Overall, this video provides intricate details on reporting trust income/gains accurately based on the legislation. This video is based on tax law for the year ending 28 February 2025. Video content Differentiating between attribution, vesting, and distribution, and providing guidance on computing each amount. The conduit principle. The trustees’ responsibilities with regards to vesting / distributing to beneficiaries and the importance of a paper trail. Reviewing the tax practitioner’s duty to ensure comprehensive and accurate disclosure for all taxpayers.
