Changes in SARS regulations for the taxation of family trusts with assets in South Africa and / or abroad have put a bit of a dent in the massive tax savings afforded by putting one’s Estate into a Family Trust. The innovative tax solutions offered by family trusts came primarily from the family trust entity itself, and the tax laws and breaks afforded trusts.
That said, family trusts are still the best way to protect family wealth, particularly over generations.
While prior tax exemptions and benefits, particularly those to do with offshore investments, are no longer straight forward, family trusts still offer the opportunity to pay less tax than you (and your beneficiaries) would otherwise pay on your estate.
Creative tax solutions now come from purposefully innovative tax planning, estate planning, structuring (i.e. entity choice – e.g. Inter Vivo / Living Trusts, Bewind or Testamentary Trusts) and investment management of family trusts.
Family trust taxation from 2019:
- Still exempt form Estate duty but no longer exempt from Capital Gains tax, and subject to up to 40% income tax.
- Foreign assets: Family Trusts can be exempt from taxation on Foreign Capital assets but income from those assets is now subject to SA tax. There’s no getting around this thanks to new international reporting agreements. The ‘can’ is important. That’s what you’ll need your tax planning and structuring team for.
- Tax liabilities can be in the hands of the benefactor or the beneficiaries. Again, thank to some taxation variances afforded by this, taking it into account with innovative tax planning can save on tax payments.
Family Trust tax solutions – compliant and innovative:
Innovative tax solutions start with being compliant and up-to-date with changing South African tax and International regulations.
It’s essential now that family trust management is in the hands not only of trustees but a trust management team with expertise in the various Family trust structures available, changing tax regulations for trusts, and investments.
The team at TAT has accounting and legal experience for creating tax solutions within a family trust, contact us and we will assist you with some innovative and compliant ideas for your trust.
You might also be interested in
Company compliance with legislation – What at you should know
All companies, large and small – from one-man businesses to corporations – must adhere to a core set of legal requirements. These requirements ensure that all companies in South Africa are in compliance with legislation and compliant with government rules on company...
Share Sales – What happens when you sell them
Share sales are subject to Shareholder Agreements that protect a company and the individual shareholders by restricting the transfer of shares. In effect, this makes selling shares subject to a cascade of legal agreements, documents and processes – all stemming from...
Tax advisor – how to choose one and why you need tax advice
Tax hurts, as does doing your taxes. That’s a given. That’s why we use the word ‘taxing’ to describe something that is tiring and drains you. However, paying your taxes can also cost you more than it needs to. In some cases - a lot more! This is the fundamental reason...
With over 23 years of unwavering expertise, I am a seasoned Chartered Accountant committed to financial excellence. My journey in the realm of finance has been marked by astute strategic insights, meticulous attention to detail, and an unyielding dedication to precision. Over the years, I've navigated the complexities of financial landscapes, providing invaluable counsel to diverse clients. My proficiency extends across auditing, taxation, and financial management, coupled with a profound understanding of regulatory frameworks. As a registered professional, I have consistently upheld the highest standards of integrity and ethics, earning a reputation as a trusted advisor in the dynamic world of finance.
