Magister Legum - LLM / The utilisation of trusts has become a popular trend among taxpayers, especially high net worth individuals1 (hereafter HNWI) who wish to reduce potential estate duties. The SARS Strategic Plan stated that there is a ‘compliance risk posed by HNWI and the use of trusts to conceal their income’.2 The SARS Strategic Plan announced that trust reform would be prioritised. Minister of Finance, Pravin Gordhan (hereafter Gordhan) referred in his 2012/2013 budget speech3 to various measures proposed to protect the tax base and limit the scope for tax leakage and avoidance. Gordhan reiterated the state’s position regarding the abuse of trusts by indicating that reforms will be made regarding the taxation of both local and offshore trusts which have long been a problem for global tax enforcement due to their flexibility and flow-through nature. National Treasury and SARS are concerned about trusts, largely because of the income-splitting opportunities that trusts afford taxpayers. There are envisaged tax amendments which will impact South Africa’s (hereafter SA) trust landscape and could derail many carefully drafted trust structures. It will thus be important for estate owners to consider these envisaged tax amendments when they come into operation, in order to ascertain the full extent of the implications and then it can also further be determined what the impact of these 1 Income in excess of R7 million, alternatively R75 million in assets. South Afican Revenue Service (hereafter SARS) Strategic Plan (2012/13- 2016/17) 19 available at http://www.sars.gov.za (accessed 6 November 2013) (hereafter SARS Strategic Plan). 2 SARS Strategic Plan 19. 3 2012-2013 budget speech 22 available at http://www.sars.gov.za (accessed 6 November 2013) (hereafter budget speech). 11 changes will be on the effectiveness of the discretionary family trust as an estate planning vehicle in SA in the future. The purpose of this thesis is to determine the impact of the current statutory anti-tax avoidance provisions on the effectiveness of the discretionary family trust as an estate planning vehicle in SA, especially due to the fact that the trust form has been abused in the past for tax avoidance purposes.

C’est désormais un fait acquis : la population française a vieilli. Cette évolution démographique n’est pas sans incidence sur le droit des successions et libéralités. D’une part, la personne âgée est incitée à transmettre précocement aux générations plus jeunes et plus actives. D’autre part, elle est sommée de songer au coût de la prise en charge d’une éventuelle dépendance liée au grand âge. Ces injonctions contradictoires conduisent à adopter une approche différente de l'anticipation successorale. Bien entendu, l'acte d'anticipation sera toujours considéré comme efficace lorsqu’il permettra au de cujus d’imposer durablement sa volonté, au-delà même de la mort. Mais, désormais, l’acte doit en outre faire montre d’une certaine capacité d’adaptation. Face aux différents événements jalonnant une longue existence, les besoins de chacun évoluent, si bien que les arbitrages réalisés plusieurs décennies auparavant se révéleront parfois peu judicieux. C'est pourquoi la stabilité et l'adaptabilité sont désormais devenues les deux caractéristiques primordiales, bien qu’apparemment inconciliables, d’une stratégie de transmission pérenne. Pour triompher de l’épreuve du temps, le projet doit ainsi allier tout à la fois les qualités du chêne et du roseau, c’est-à-dire aussi bien la robustesse de l’arbre séculaire que la souplesse de la jeune plante. / It’s a fact : the French population is aging. This demographic trend has an impact on inheritance law and estate planning. On one hand, seniors are encouraged to hand down property to younger generations early on. On the other hand, they are asked to put aside money for their own care. Estate planning must adapt to this new context. As of now, stability and adaptability are the two primordial characteristics of good estate planning, although they’re apparently irreconcilable. First, you must be sure that wishes will be respected and not betrayed by the heirs after your death. Then, Estate planning will be more efficient if it can adapt. Life changes, needs change, so the elderly must be free to change their mind when a project made years ago becomes irrelevant. To be more efficient, estate planning must combine the qualities of the oak and the reed : the robustness of the old tree and the flexibility of the young plant.

No description available.

no abstract provided by author / Master of Science

Thesis (MBA)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: After many years of speculation about the possible introduction of a capital gains tax in South Africa, the tax is finally with us. Coming on top of the move to a residence basis of taxation, the introduction of the capital gains tax will impose a massive burden on the limited, skilled administrative recourses available to taxpayers and the SARS alike. Amongst investors and even some professional financial advisors such as auditors and attorneys there still is confusion and not a lack of knowledge on CGT. Appropriate planning and structuring is seldom performed. The potential CGT liability escalates every year depending on the growth rate of the particular asset. CGT will therefor be an unavoidable and growing problem for investors. Planning for the CGT goes hand in hand with estate planning and requires decisions to be taken now. The purpose is to position and structure your portfolio to avoid or reduce future tax liability (CGT and estate duty). In this study an Excel program was developed in order to calculate CGT. The model (Estate Advisor) also has a decision function and can calculate and predict future CGT liability. The purpose of the model is to test the result of a range of decisions and assumptions quickly and accurately. This enables the investor to decide on entities and structures that would best suit his situation given the assets under his control. The Estate Advisor is a tool for producing different scenarios of future situations regarding CGT and estate duty. It helps the investor to investigate and consider different options regarding his investments with regard to CGT. / AFRIKAANSE OPSOMMING: Na baie jare van onsekerheid en gissings omtrent die moontlike implementering van Kapitaalwinsbelasting in Suid-Afrika, is hierdie belasting finaal geïmplementeer deur die SAID. Die implementering van KWB val saam met die verskuiwing na "verblyf' as "bron" van inkomstebelasting. Tesame sal dit groot druk uitoefen op die beperkte administratiewe bronne wat aan die belasingbetaler en die SAID beskikbaar is. Tussen gewone beleggers en selfs ook tussen sommige professionele finansiële adviseurs (ouditeure en prokureurs) heers daar in 'n groot mate onsekerheid en onkundigheid met betrekking tot KWB. Die probleem is dat 'n ferm basis van kennis van KWB benodig word om in staat te wees om die berekeninge te doen. 'n Gevolg van hierdie situasie is dat dringend benodigde aandag nie altyd aan beleggers geskenk word nie. Die potensiële KWB aanspreeklikheid eskaleer elke jaar met die betrokke groeikoers van die onderliggende bate. KWB is dus 'n onafwendbare en groeiende realiteit vir beleggers. Die beplanning vir toekomstige KWB gaan hand aan hand met beplanning vir boedelbelasting doeleindes. Die doel is om die belegger se portefeulje te posisioneer en struktureer sodat toekomstige belastingaanspreeklikheid (KWB en boedelbelasting) beperk kan word. In hierdie tesis is 'n eenvoudige Excel model ontwerp om KWB en boedelbelasting te bereken. Die model doen al die berekeninge en haal dus die las van die belegger af om oor detail kennis van KWB te beskik. Die model (Estate Advisor) het ook 'n besluitnemingsfunksie waar die belegger verskillende opsies kan oorweeg en toets. Die model word gebruik om toekomstige KWB te voorspel en bereken. Dit stel die belegger in staat om besluite te maak omtrent entiteite en strukture wat in sy situasie die gepaste antwoord sal wees. Die model moet nie gesien word as 'n instrument om beleggingsbesluite te neem nie en dit kan nie keuses uitoefen tussen verskillende beleggingsbates nie. Die doel van die model is uitsluitlik om die effek van verskillende besluite en aannames te vinnig en akkuraat te bereken. Dit dien as hulpmiddel vir die beplan van KWB en boedelbelasting wat in die toekoms betaal moet word. Die Estate Advisor is 'n instrument vir die produsering van verskillende scenarios van toekomstige situasies met betrekking tot KWB en boedelbelasting. Dit help die belegger om verskillende opsies te oorweeg en die beste beleggingsbesluit te maak.

Estate duty in South Africa is levied in terms of the Estate Duty Act since 1955. Estate duty is currently calculated at a flat rate of 20% on the amount of which the net worth of an estate exceeds a primary rebate of R3,5 million. Statistics show that only a small percentage of estates in South Africa is taxable. Furthermore, many estate owners – particularly those whose estates are liable for estate duty – have the financial means to afford estate planning services to reduce estate duty. This reality has the effect that estate duty is paid by a very insignificant number of estates. Similar to estate duty, capital gains tax has the tax incentive of constituting vertical equity – creating the outcome that taxpayers with greater capability to pay taxes should be taxed more severely. Capital gains tax is also a tax payable (among other instances) at the death of an estate owner. This gives rise to double taxation. Further matters that need to be considered are constitutional justification of estate duty and the question whether the categories of current taxable estates correlate with the taxable estates envisaged by the legislator in 1955. In amending fiscal policy, it is useful to consider international trends. In countries such as Australia, New Zealand and Canada estate duty has been abolished. This phenomenon demonstrates that estate duty is not an essential element of a tax system. The aim of this study is to investigate the contribution of the abolishment of estate duty to South African tax law. / Thesis (LL.M.)--North-West University, Potchefstroom Campus, 2011.

Estate duty in South Africa is levied in terms of the Estate Duty Act since 1955. Estate duty is currently calculated at a flat rate of 20% on the amount of which the net worth of an estate exceeds a primary rebate of R3,5 million. Statistics show that only a small percentage of estates in South Africa is taxable. Furthermore, many estate owners – particularly those whose estates are liable for estate duty – have the financial means to afford estate planning services to reduce estate duty. This reality has the effect that estate duty is paid by a very insignificant number of estates. Similar to estate duty, capital gains tax has the tax incentive of constituting vertical equity – creating the outcome that taxpayers with greater capability to pay taxes should be taxed more severely. Capital gains tax is also a tax payable (among other instances) at the death of an estate owner. This gives rise to double taxation. Further matters that need to be considered are constitutional justification of estate duty and the question whether the categories of current taxable estates correlate with the taxable estates envisaged by the legislator in 1955. In amending fiscal policy, it is useful to consider international trends. In countries such as Australia, New Zealand and Canada estate duty has been abolished. This phenomenon demonstrates that estate duty is not an essential element of a tax system. The aim of this study is to investigate the contribution of the abolishment of estate duty to South African tax law. / Thesis (LL.M.)--North-West University, Potchefstroom Campus, 2011.

Thesis (MAcc)--University of Stellenbosch, 2009. / AFRIKAANSE OPSOMMING: Met die bekendstelling van kapitaalwinsbelasting in 2000 was belastingpligtiges en belastingadviseurs bekommerd oor die invloed daarvan op belasting- en boedelbeplanning. Om die volle impak daarvan te verstaan moet die werking van kapitaalwinsbelasting ondersoek word. Paragraaf 10 van die Agste Bylae definieer die belasbare kapitaalwinste vir die jaar van aanslag. Hiervolgens word kapitale winste in die hande van verskillende belastingpligtiges teen verskillende “koerse” belas. In die algemeen word daar na Paragraaf 10 verwys as die insluitingsartikel wat op kapitaalwinste van toepassing is. Aangesien slegs ‘n “gedeelte” van kapitaalwinste onderhewig is aan normale belasting is een van die grootste faktore in die huidige belastingomgewing steeds om te onderskei tussen inkomste van ‘n kapitale of nie-kapitale aard. Deur die toepassing van Paragraaf 10 word kapitaalwinste gerealiseer deur Trusts en Maatskappye teen hoër koerse belas, as in die geval van individue. Dit het tot gevolg dat belastingpligtiges en belastingadviseurs die gebruik van trusts as ‘n effektiewe hulpmiddel vir boedelbeplanning begin bevraagteken het. Die effektiewe belastingkoers van toepassing op kapitaalwinste gerealiseer deur individue is egter die laagste van al die verskillende belastingpligtiges. Wanneer ‘n individue te sterwe kom is sy boedel onderhewig aan boedelbelasting, wat ‘n verdere belasting las tot gevolg het. Indien ‘n trust effektief toegepas word tydens die opstel van ‘n boedelplan vir ‘n individu sal die bates van die trust nie onderhewig wees aan boedelbelasting nie. Deur die verskeie opsies wat beskikbaar is vir ‘n belastingpligtige, wanneer hy ‘n besluit moet neem watter beleggingsvoertuig hy moet gebruik vir die belegging, kan die effektiewe belastingkoerse vergelyk word. Deur die uitkomste van die verskeie opsies teenoor mekaar te vergelyk bewys dit dat indien ‘n trust korrek aangewend word, dit steeds as ‘n effektiewe hulpmiddel in ‘n boedelplan kan aangewend word. Tydens die uitvoer van die vergelyking van die verskillende opsies wat vir die belastingpligtige beskikbaar is, is die tydwaarde van geld buite rekening gelaat. Indien die lewensverwagting van ‘n individu in berekening gebring word kan die uitkoms van die vergelyking moontlik anders wees. Deur dit alles in ag te neem bevestig dit weereens dat elke individue se boedelplan uniek sal wees indien sy persoonlike finansiële omstandighede in ag geneem word. / ENGLISH ABSTRACT: With the introduction of capital gains taxation in 2000, taxpayers and their advisors feared the impact thereof on tax planning and estate planning. To determine the impact thereof the taxation of capital gains must be understood. Paragraph 10 of the Eight Schedule define the taxable portion of capital gains for the year of assesment. Paragraph 10 is also commonly known as the inclusion clause applicaple on capital gains. This application of paragraph 10 has the effect that capital gains realised by different types of taxpayers are taxed at different rates. Due to the application of paragraph 10 only a portion of the capital gain realised by the taxpayer is subject to normal taxation. Therefor one of the biggest concerns for taxpayers still is to determine if income are of a capital nature or not. The inclusion rate, according to paragraph 10, applicable on capital gains realised by trusts and companies is higher than that of a individual and gives rise to a bigger tax burden relating to capital profits for trusts and companies. Therefor taxpayers and their advisors doubt wether a trust could still be used as an effective tool for estate planning. The effective tax rate on caiptal gains for individuals is the lowest for all types of taxpayers. But when an individual dies his estate is subject to estate duty, which leaves an additional burden for an individual to take into account. When a trust is effectively utilised in preparing an estate plan for an individual, the assets of the trust should not be subject to estate duty. By evaluating the effective tax rates applicable to the different options available to a taxpayer when he needs to determine which investment vehicle to use when making an investment, a comparision can be made. By comparing the effective tax rates a conclusion can be drawn that a trust can still be used as an effective tool for estate planning when utilised properly. When the comparison was made the time value of money was ignored. If the life expectancy of a individual are taken into account the outcome could be different. When everything is taken into consideration the conclusion is that the estate plan for every individual is unique and determined by his or her personal financial circumstances.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation) Johannesburg, 2016 / The Davis Tax Committee released their First Interim Report on Estate Duty on 13 July 2015 which contained certain recommendations concerning the way trusts should be taxed which were to act as a deterrent against aggressive estate planning. This report also contained suggested changes to current estate duty legislation. Changes to these recommendations, yet to be published in a second report, were discussed in a webinar by Judge Dennis Davis in December 2015 and the 2016 Budget Review contained additional suggestions with regard to the taxation of trusts. This study constructs case studies to compare the effect of the various recommendations on total taxation and capital preservation in a scenario where assets are held in a South African trust over a period of time, with a scenario where such assets are kept in a South African tax resident’s personal estate. The case studies focus only on high-net-worth trusts and personal estates. The possible double taxation which may occur as a result of levying both estate duty and capital gains tax on death is also briefly considered. The case study results show the punitive effects of the proposed repeal of the s 4(q) estate duty deduction for inter-spousal bequests on the personal estate scenarios and show how several of the new proposals could result in effective capital tax rates in excess of the deemed maximum capital tax benchmark of 15%. This may result in more aggressive estate planning strategies being employed should such proposals be enacted. The report also concludes that the double taxation effect of both estate duty and capital gains tax levied on death is likely to be small on average, although individual high-net-worth estates may be subject to such double taxation in certain cases. Key words: Davis Tax Committee’s First Interim Report on Estate Duty, taxation of South African trusts, South African trusts, South African estate duty, estate planning, double taxation on death, estimate for total capital gains tax collected on death, high-net-worth individuals, inequality in South Africa, wealth tax in South Africa, total taxation in South African trusts, income-splitting in South African trusts, capital preservation in South African trusts, South African trust case study, South African estate duty case study, South African estate planning case study / MT2017

This paper addresses the impact of the federal estate tax on a family-run business as well as the optimal estate planning techniques that can be implemented to ease the estate tax burden.