The bequest of a usufruct to one or more interim usufructuaries for a limited period after the decease of the first usufructuary is often utilised by estate planners to reduce the value of the ceasing limited interest and thus to effect a saving in respect of estate duty. The saving in respect of estate duty is effected due to the fact that - the value of the ceasing limited interest in the estate of the first usufructuary is calculated only over the duration of the period during which the interim usufructuary is entitled to the limited interest and not also over the life expectancy of the ultimate beneficiary, and - that, on the cessation of the interim usufruct due to the efflux of time. no estate duty is payable. The very first reference to this method appeared in an article published in The Taxpayer during 1965. Other authors like Meyerowitz, Silke and Stein and Davis, Beneke and Jooste also referred to this method without analysing it or investigating the legality thereof. All the aforementioned authors relied to a certain extent for their views on a judgment of acting judge Warner in Bassett v Commissioner for Inland Revenue (1 961 4 SA 769 (D)). This dissertation is therefore aimed at investigating the legality of the method and to focus on a few practical aspects regarding the application thereof as an estate planning instrument. An analysis of the wording of the charging clause (section II (a )(1) of the Estate Duty Act and the valuation clause (section 5(1) of the act) has led to the belief that, in considering the validity of the method, it is extremely important to bear in mind the principles applicable to the vesting of testamentary rights. In terms of the valuation clause of the Estate Duty Ad the value of a ceasing limited interest for estate duty purposes is determined by capitalising the annual value of the right of enjoyment of the properly in which the deceased held any such limited interest to the extent to which the person who, upon the cessation of the said interest of the deceased in consequence of the death of the deceased, becomes entitled to any right of enjoyment of such properly. In terms of the charging clause "the person to whom any advantage accrues by the death of the deceased" is liable for the payment of estate duty in respect of the cessation of a limited right. In order to calculate the value of a ceasing limited interest and to determine the liability for payment of estate duty in respect thereof it is necessary to determine (a) the extent to which a successor in title of a deceased in consequence of the death of the deceased has become entitled to any right of enjoyment, and (b) to which person any advantage has accrued by the death of the deceased. After analysing the wording of section 5(1)(b) and section 11(a)(1) the writer has come to the following conclusions: (a) In the case of an interim usufruct the right of enjoyment of the first usufructury has to be capitalised only over the period of currency of the interim usufruct and not also over the life expectancy of the owner of the nuda proprietas. (b) Subsection 5(l)(b) does not make provision for the valuation of an interim usufruct at the termination them due to the efflux of time. (c) Upon the decease of the first usufructuary an advantage as contemplated in section 11(a)(1) accrues to the interim usufructury but not to the owner of the nuda proprietas. (d) On the cessation of an interim usufruct due to the efflux of time there is no person to whom any advantage accrues by the death of a deceased as contemplated in subsection 11 (a)(1), and consequently the owner of the nuda proprietas does not at that stage incur any liability for estate duty. In view of the aforegoing considerations the writer has come to the conclusion that the utilisation of this method does not constitute a contravention the provisions of the Estate Duty Ad. The artificiality of the valuation method prescribed in terms of subsection 5(1)(b) lends itself to reducing the value of a limited interest by interposing a successor for a short period between the deceased and the ultimate beneficiary. It follows therefore that the utilisation of this method does not constitute tax evasion. Where the main consideration for the appointment of an intermediary usufructuary is not so much the possible benefit that may acme to the intermediary as the limitation of estate duty, the application of the method may constitute an avoidance of estate duty. The Estate Duty Act, however, does not contain any general anti-avoidance provision similar to section 103 of the lncome Tax Act. In utilising this method estate planners should therefore bear in mind the possibility that the fiscus may sooner or later introduce an amendment to the Estate Duty Act to close this loophole. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2004.

The bequest of a usufruct to one or more interim usufructuaries for a limited period after the decease of the first usufructuary is often utilised by estate planners to reduce the value of the ceasing limited interest and thus to effect a saving in respect of estate duty. The saving in respect of estate duty is effected due to the fact that - the value of the ceasing limited interest in the estate of the first usufructuary is calculated only over the duration of the period during which the interim usufructuary is entitled to the limited interest and not also over the life expectancy of the ultimate beneficiary, and - that, on the cessation of the interim usufruct due to the efflux of time. no estate duty is payable. The very first reference to this method appeared in an article published in The Taxpayer during 1965. Other authors like Meyerowitz, Silke and Stein and Davis, Beneke and Jooste also referred to this method without analysing it or investigating the legality thereof. All the aforementioned authors relied to a certain extent for their views on a judgment of acting judge Warner in Bassett v Commissioner for Inland Revenue (1 961 4 SA 769 (D)). This dissertation is therefore aimed at investigating the legality of the method and to focus on a few practical aspects regarding the application thereof as an estate planning instrument. An analysis of the wording of the charging clause (section II (a )(1) of the Estate Duty Act and the valuation clause (section 5(1) of the act) has led to the belief that, in considering the validity of the method, it is extremely important to bear in mind the principles applicable to the vesting of testamentary rights. In terms of the valuation clause of the Estate Duty Ad the value of a ceasing limited interest for estate duty purposes is determined by capitalising the annual value of the right of enjoyment of the properly in which the deceased held any such limited interest to the extent to which the person who, upon the cessation of the said interest of the deceased in consequence of the death of the deceased, becomes entitled to any right of enjoyment of such properly. In terms of the charging clause "the person to whom any advantage accrues by the death of the deceased" is liable for the payment of estate duty in respect of the cessation of a limited right. In order to calculate the value of a ceasing limited interest and to determine the liability for payment of estate duty in respect thereof it is necessary to determine (a) the extent to which a successor in title of a deceased in consequence of the death of the deceased has become entitled to any right of enjoyment, and (b) to which person any advantage has accrued by the death of the deceased. After analysing the wording of section 5(1)(b) and section 11(a)(1) the writer has come to the following conclusions: (a) In the case of an interim usufruct the right of enjoyment of the first usufructury has to be capitalised only over the period of currency of the interim usufruct and not also over the life expectancy of the owner of the nuda proprietas. (b) Subsection 5(l)(b) does not make provision for the valuation of an interim usufruct at the termination them due to the efflux of time. (c) Upon the decease of the first usufructuary an advantage as contemplated in section 11(a)(1) accrues to the interim usufructury but not to the owner of the nuda proprietas. (d) On the cessation of an interim usufruct due to the efflux of time there is no person to whom any advantage accrues by the death of a deceased as contemplated in subsection 11 (a)(1), and consequently the owner of the nuda proprietas does not at that stage incur any liability for estate duty. In view of the aforegoing considerations the writer has come to the conclusion that the utilisation of this method does not constitute a contravention the provisions of the Estate Duty Ad. The artificiality of the valuation method prescribed in terms of subsection 5(1)(b) lends itself to reducing the value of a limited interest by interposing a successor for a short period between the deceased and the ultimate beneficiary. It follows therefore that the utilisation of this method does not constitute tax evasion. Where the main consideration for the appointment of an intermediary usufructuary is not so much the possible benefit that may acme to the intermediary as the limitation of estate duty, the application of the method may constitute an avoidance of estate duty. The Estate Duty Act, however, does not contain any general anti-avoidance provision similar to section 103 of the lncome Tax Act. In utilising this method estate planners should therefore bear in mind the possibility that the fiscus may sooner or later introduce an amendment to the Estate Duty Act to close this loophole. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2004.

The South African tax system currently provides for wealth transfer taxation by virtue of estate duty in terms of the Estate Duty Act and donations tax in terms of Part V of the Income Tax Act, which are primarily levied on the transferor. At the outset, this study investigates the conceptual justification for this type of taxation in the South African context, especially in view of the fact that some countries have recently abolished their wealth transfer taxes. It is concluded that the arguments against wealth transfer taxation are not compelling enough to justify its abolition from the South African tax system. It is also submitted that the levying of capital gains tax on the death of a wealth holder cannot act as a substitute measure to tax wealth transfers in the South African system. It is, however, explained that the levying of both taxes reflects a scenario of double taxation on a deceased estate and that the equity criterion supports the taxation of wealth transfers in the hands of the recipient. The possibility of merely including inheritances and gifts in the “gross income” of a beneficiary is explored, but is submitted that such a move would be politically and administratively unlikely. After having come to the conclusion that wealth transfer taxation is indeed justifiable for the South African tax system, two key issues are explored in the study. The first issue relates to the lack of integration that exists between the taxation of inter vivos transfers (under the donations tax regime) and the taxation of transfers on death (under the estate duty regime). After having compared the systems in the United Kingdom, the Netherlands and Ireland, it is concluded that it is conducive to equity, neutrality and tax administration that the rules relating to the jurisdictional basis, double taxation relief, tax rates and valuation rules apply (in general) equally to inter vivos transfers and transfers on death. It is evident, however, that it remains necessary to distinguish between the two types of transfers, because this creates a flexible platform to accommodate special circumstances and differences. A number of measures to improve integration under the current regimes are recommended, but it is suggested that, ideally, the Estate Duty Act and Part V of the income Tax Act should be replaced by a single integrated statute. The second issue deals with the question whether or not the well-established estate duty and donations tax regimes should be replaced by a recipient-based system, especially in view of its theoretical appeal. After having shown that a recipient-based wealth transfer tax offers more appropriate solutions to some of the problem areas common to wealth transfer taxation in general (such as the accommodation of third-party life insurance benefits, limited interests and a special regime for discretionary trusts), it is concluded that the current regimes should be replace by a recipient-based wealth transfer tax, which may even be accommodated as a separate schedule to the existing income Tax Act in much the same way as capital gains tax. / Thesis (LLD)--University of Pretoria, 2010. / Mercantile Law / unrestricted

The decision of an estate owner to employ a trust as an estate planning instrument normally involves the disposal of all or part of his growth assets to the trust. This is done to ensure that the value of such growth assets is pegged down in his personal estate, whilst any growth in the assets occurs in the trust. The objective is to minimise any estate duty that will be payable after his death. The transfer of such assets and the concomitant negotiation of the settlement of the purchase price are normally agreed to occur on loan account which will be repayable on demand. Subsequent to the disposal of the assets, it is a well established estate planning technique for the estate owner to reduce the loan account by annually waiving R30 000 of such loan in favour of the trust. This results in reducing the debit loan (asset) in the hands of the estate owner and thereby also improving his position from an estate duty point of view. The liability (credit loan) of the trust is thereby annually reduced. Because an individual can donate R30 000 annually free of donations tax, no additional donations tax liability will be incurred when applying this technique. Most estate owners that have applied the abovementioned technique, include in their will a provision whereby they bequeath any outstanding loan from the trust at the date of the testator's death, to the trust as a legatee. On 1 October 2001 South Africa entered into a new tax dispensation with the introduction of capital gains tax (CGT). Comprehensive legislation was included in the Income Tax Act (8th schedule) to regulate this new form of taxation. Paragraph 12(5) of the 8th schedule specifically stipulates that a reduction or waiver of a loan/debt will attract CGT. Therefore the above mentioned techniques of donating a portion, and subsequently bequeathing the outstanding loan amount to a trust suddenly became the target of SARS' close scrutiny from a CGT perspective. Hence, it was no surprise that the first High Court decision on CGT had recently been delivered in this regard. The purpose of this dissertation is to investigate and scrutinise, not only the decision in the abovementioned court case, but also the various opinions and arguments raised on this topic. The submission is that the findings and conclusions of such an investigation should enable those involved in estate planning and the preparation of wills to be wary of the CGT risks attached to the abovementioned techniques and to avoid the pitfalls. Certain recommendations and conclusions to achieve the same estate planning result, are proposed in this dissertation. Certain suggestions were also made with regards to the wording of provisions to be included in a will in order to bequeath a loan or debt to a trust without the risk of attracting unforeseen CGT. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2006.

The decision of an estate owner to employ a trust as an estate planning instrument normally involves the disposal of all or part of his growth assets to the trust. This is done to ensure that the value of such growth assets is pegged down in his personal estate, whilst any growth in the assets occurs in the trust. The objective is to minimise any estate duty that will be payable after his death. The transfer of such assets and the concomitant negotiation of the settlement of the purchase price are normally agreed to occur on loan account which will be repayable on demand. Subsequent to the disposal of the assets, it is a well established estate planning technique for the estate owner to reduce the loan account by annually waiving R30 000 of such loan in favour of the trust. This results in reducing the debit loan (asset) in the hands of the estate owner and thereby also improving his position from an estate duty point of view. The liability (credit loan) of the trust is thereby annually reduced. Because an individual can donate R30 000 annually free of donations tax, no additional donations tax liability will be incurred when applying this technique. Most estate owners that have applied the abovementioned technique, include in their will a provision whereby they bequeath any outstanding loan from the trust at the date of the testator's death, to the trust as a legatee. On 1 October 2001 South Africa entered into a new tax dispensation with the introduction of capital gains tax (CGT). Comprehensive legislation was included in the Income Tax Act (8th schedule) to regulate this new form of taxation. Paragraph 12(5) of the 8th schedule specifically stipulates that a reduction or waiver of a loan/debt will attract CGT. Therefore the above mentioned techniques of donating a portion, and subsequently bequeathing the outstanding loan amount to a trust suddenly became the target of SARS' close scrutiny from a CGT perspective. Hence, it was no surprise that the first High Court decision on CGT had recently been delivered in this regard. The purpose of this dissertation is to investigate and scrutinise, not only the decision in the abovementioned court case, but also the various opinions and arguments raised on this topic. The submission is that the findings and conclusions of such an investigation should enable those involved in estate planning and the preparation of wills to be wary of the CGT risks attached to the abovementioned techniques and to avoid the pitfalls. Certain recommendations and conclusions to achieve the same estate planning result, are proposed in this dissertation. Certain suggestions were also made with regards to the wording of provisions to be included in a will in order to bequeath a loan or debt to a trust without the risk of attracting unforeseen CGT. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2006.

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.

From all over the globe the inequality between the rich and the poor is a topic that is debated politically and socially. Wealth tax is often mentioned as an easy solution to reduce this inequality effectively. Even in South Africa cries for a wealth tax have been heard following Archbishop Emeritus Desmond Tutu’s comments that such a tax can help reduce the effect of past injustices. The imposition of a wealth tax has various advantages and disadvantages that are strongly debated by the proponents and opponents of the tax. The impact of these advantages and disadvantages has however not been measured and quantified up to date. Although the disadvantages seem to outweigh the advantages, it seems that there is some scope for a wealth tax to be politically motivated. The dawning of the modern era has however changed the landscape for tax policies. Global mobility has resulted in individuals being able to choose where they work, live and invest. Taxes have been proved to be a factor that influences these decisions of individuals on where to live and invest. It is therefore becoming increasingly important to have tax policies that are competitive in comparison to peer countries. This study focused on determining how competitive South Africa’s tax policies are, relating to wealthy individuals, compared to the equivalent taxes in other African countries with similar sized economies. The study consists of qualitative, non-empirical research performed in the form of a literature review. The study’s finding is that South Africa has more types of taxes imposed on wealthy individuals than any other of the sampled countries. In addition, the taxes imposed are more often than not substantially higher than the equivalent charged by its peers. This could have a detrimental effect when investors start to realise that they could optimise the resources available to them by choosing not to work and live in South Africa, but would rather select one of its neighbouring countries. Not only will potential new investors be discouraged from investing, but the question also arises at which point South African residents will start to seek their fortune elsewhere. Based on these findings, it seems that there is no scope for imposing yet another wealth tax in South Africa at present. / Dissertation (MCom)--University of Pretoria, 2012. / lmchunu2014 / Taxation / unrestricted

The treatment of life insurance policies in deceased estates and the effect thereof on marriages in community of property is the cause of various problems for executors. In terms of section 3(3) of the Estate Duty Act 45 of 1955 life insurance policies are deemed to be assets of the deceased. Consequently life insurance policies are reflected in the estate duty addendum of the deceased estate. Life insurance policies however are not always reflected in the liquidation account of the deceased estate as assets, notwithstanding the fact that life insurance policies are deemed to be assets for estate duty purposes. In this regard a distinction should be made between two situations: firstly where life insurance policies are reflected in the liquidation account of the insured estate and secondly where life insurance policies are not reflected in the liquidation account of the insured. For spouses married in community of property this creates a problem especially when you keep in mind that life insurance policies are in many instances a person's biggest monetary asset. When life insurance policies are reflected in the liquidation account of the insured, the surviving spouse has a claim on half of the policy proceeds. When life insurance policies are not reflected in the liquidation account of the insured, the surviving spouse has no claim on the policy proceeds. The problem that arises in this regard is that there is no certainty as to what extent life insurance policies should be included in the calculation of estate duty, and how these policies must be reflected in the estate of the deceased. This uncertainty has been perpetuated by courts. This research will illustrate how the courts came to different conclusions where the facts were more or less similar. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2010.

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.

The treatment of life insurance policies in deceased estates and the effect thereof on marriages in community of property is the cause of various problems for executors. In terms of section 3(3) of the Estate Duty Act 45 of 1955 life insurance policies are deemed to be assets of the deceased. Consequently life insurance policies are reflected in the estate duty addendum of the deceased estate. Life insurance policies however are not always reflected in the liquidation account of the deceased estate as assets, notwithstanding the fact that life insurance policies are deemed to be assets for estate duty purposes. In this regard a distinction should be made between two situations: firstly where life insurance policies are reflected in the liquidation account of the insured estate and secondly where life insurance policies are not reflected in the liquidation account of the insured. For spouses married in community of property this creates a problem especially when you keep in mind that life insurance policies are in many instances a person's biggest monetary asset. When life insurance policies are reflected in the liquidation account of the insured, the surviving spouse has a claim on half of the policy proceeds. When life insurance policies are not reflected in the liquidation account of the insured, the surviving spouse has no claim on the policy proceeds. The problem that arises in this regard is that there is no certainty as to what extent life insurance policies should be included in the calculation of estate duty, and how these policies must be reflected in the estate of the deceased. This uncertainty has been perpetuated by courts. This research will illustrate how the courts came to different conclusions where the facts were more or less similar. / Thesis (LL.M. (Estate Law))--North-West University, Potchefstroom Campus, 2010.