An investigation into the future of discretionary trusts in South Africa - an income tax perspective
Date
2014-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AOSIS
Abstract
Trusts have long been associated with elaborate tax avoidance schemes, primarily as a result of their
flow-through nature. In the National Budget the Minister of Finance indicated that the government
was proposing several legislative measures during 2013/2014 regarding trusts to control abuse. At
this stage the proposals are vague and confusing, but it is intimated that the conduit pipe principle
may be under review as the proposals state that trusts should no longer act as a flow-through
vehicle, meaning that the amounts distributed to the beneficiaries will no longer retain their original
identity. The main objective of the research was to clarify the proposed changes to the taxation of
trusts, to investigate the potential impact(s) of these proposals (albeit unclear and consequently
based on certain assumptions), and to assess whether discretionary trusts still have a future in South
Africa given these proposals. In order to meet this objective, a qualitative approach based on a
literature study of pure theoretical aspects was used. It was found that should the proposals become
law the beneficiaries will be worse off.
Description
CITATION: Brink, S. M. & Willemse, L. 2014. An investigation into the future of discretionary trusts in South Africa – an income tax perspective. Journal of Economic & Financial Sciences, 7(3):795–616.
The original publication is available at https://jefjournal.org.za
The original publication is available at https://jefjournal.org.za
Keywords
Discretionary trusts -- Taxation -- South Africa, Trusts and trustees -- Taxation -- South Africa, Income tax -- South Africa
Citation
Brink, S. M. & Willemse, L. 2014. An investigation into the future of discretionary trusts in South Africa – an income tax perspective. Journal of Economic & Financial Sciences, 7(3):795–616.