Page 28 - Bespoke EPG 2017 Digital

■■ Special trusts created for the mentally ill or physically disabled qualify for
the primary rebate, and are subject to capital gains tax at the same inclusion
rate of 40% as a natural person, and would qualify for the annual capital
gains tax exclusion of R40,000.

E Interest-free and low-interest loans to a trust
With effect 1 March 2017 loans made to a trust by
■■ a natural person, or
■■ at the instance of that person, a company in relation to which that person

is a connected person, and where that person or company is a connected
person in relation to the trust

the difference between the amount of interest incurred by the trust (if any,
otherwise nil) and the interest that would have been incurred by that trust
at the official rate of interest will be a continuing, annual donation for
purposes of donations tax, made by the lender on the last day of the year of
assessment of the trust

The following will be specifically excluded from the above donation provisions:
■■ special trusts that are created solely for the benefit of disabled persons
■■ trusts that fall under public benefit organisations
■■ vesting trusts (in respect of which the vesting rights and contributions of the

beneficiaries are clearly established)
■■ loans used by the trusts to fund the acquisition of a primary residence
■■ loans that constitute affected transactions and are subject to transfer pricing

provisions
■■ loans provided to the trust in terms of a sharia-compliant financing

arrangement, or
■■ loans that are subject to dividends tax
The lender may utilise the annual donations tax exemption of R100 000 (or
remaining portion if applicable) against this deemed donation.

25