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Some examples:
■■ The taxpayer transfers an investment to his spouse (who is taxed at a lower
marginal rate than he is), in order that she be taxed on the profits of the
investment. He saves the donations tax, since donations between spouses
are exempt from donations tax, and his wife pays the tax at a lower marginal
tax rate. Section 7(2) specifically deems these profits to be taxed in the
hands of the taxpayer and not in the hands of his wife.
■■ The taxpayer and founder of a trust donate a profit-making investment to his
trust and at year-end the trustees of the trust distribute the profits from this
investment to his minor child, being in the lower tax bracket than himself.
This way he avoids being taxed on these profits in his personal capacity,
being at a higher marginal rate. This scenario is specifically dealt with in
section 7(3). The taxpayer will be taxed in his own hands on these profits and
not the minor child.
■■ The taxpayer transfers an investment to his minor children. He pays the
donations tax (if the donation exceeds R100,000) but the child is taxed at
a lower tax rate. Again, section 7(3) deems these profits to be taxed in the
hands of the taxpayer.
The above serve as some examples and there may be other scenario’s which
must be carefully considered before implementing any action. While the estate
planner may well save on donations tax, there may be other unplanned tax
implications that could result.
A detailed analysis of Section 7 is beyond the scope of this guide and it is
advisable for the estate planner to consult with a professional adviser, and the
estate planning team before taking any action when including donations in his
estate plan.
Matrimonial Property Regimes
The three most important forms of marriage are: In community of property,
marriage with antenuptial contract (ANC), and the accrual marriage.
The Civil Union Act provides that any references in any other law include a civil
union, and thus these three forms will also be applicable to a civil union.
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