BLOG


Menu

Please select a category below in order to continue.

Newsletter 38

Back to Blog Categories
Newsletter 38
Dear Colleague
 
The responsibility to capture one’s thoughts, channel them in a positive direction and work hard at making a dream a reality, lies within oneself.
 
Robert Toru Kiyosaki is a well-known and respected American businessman and author of numerous books on building lasting wealth by accumulating assets which make money work fór you.  He recently spoke at an event of The Wealth Masters Tour held in Sandton on 7 and 8 September 2019 regarding wealth building strategies. 
 
Here are a few of his famous inspirational quotes:
 
“Your choices decide your fate. Take the time to make the right ones. If you make a mistake, that’s fine; learn from it and don’t make it again.”
 
“A Plan is a bridge to your dreams.  Your job is to make the plan or bridge real, so that your dreams will become real.  If all you do is stand on the side of the bank and dream of the other side, your dreams will forever be just dreams.”
 
“The size of your success is measured by the strength of your desire, the size of your dream and how you handle disappointment along the way.”
 
His message is clear:  No one else is in your way, except yourself.  So, if you are the problem, step aside and get out of your own way.
 
This month we continue with our series on charitable organizations by focusing on SARAC.
 
Soweto Animal Rescue and Advisory Centre (SARAC)
A man’s best friend, often in need of special care.
 
SARAC was founded by Jerry Selwane and launched from his home in Zuurbekom, Johannesburg in 2012.  He is a former SPCA inspector and worked there for 17 years.  Jerry deeply cares about the plight of mistreated animals. 
 
SARAC not only rehabilitates and re-homes animals, but also finds a great match between the animals and their new families.  They also strive to educate and change people’s attitude towards animals.  Their mission is to improve the living conditions of all animals in South Africa.
 
Read more about SARAC at https://www.sarac.co.za/
 
CAN A TESTAMENTARY TRUST BE CHANGED?

Read more about this in the next edition.
_________________________________________________________________________________________________ 
 
THE USE OF SPECIAL TRUSTS
 
The South African Revenue Service (SARS) recognises the use of trusts for purposes other than wealth transfer.  These trusts are called special trusts and are specifically intended for persons with disabilities who are not able to produce enough income to take care of themselves, or unable to take care for themselves and minor heirs who are related to a deceased person.  SARS introduced the concept of special trusts to bring about more favourable tax treatment for such trusts.
 
Setting up a special trust during one’s lifetime or on one’s death for a mentally disabled or incapacitated person, will allow for the safe custody of assets, while at the same time benefiting from lenient tax treatment from an income tax and capital gains tax (CGT) perspective.  Unlike conventional trusts, which are taxed at a flat rate, special trusts are taxed on the sliding scale applicable to natural persons.
 
The two special trusts recognised by SARS for tax purposes, are the following:
 
SPECIAL TRUST TYPE A – Mentally or physically disabled persons
 
Section 6B(1) of the Income Tax Act defines that this trust is created solely for the benefit of a person(s) with a mental or physical “disability”, where the disability makes it impossible for the person(s) to earn enough money to care for themselves or to manage their financial affairs.  This requirement must be met before the trust will qualify as a special trust type A.
 
This trust can be testamentary and created upon death in terms of the Will or inter-vivos, which is created while still alive.  Sometimes it is created as a result of a court order in favour of a specified natural person with a disability to assist in management of their affairs.  
 
Tax concessions for special trust type A
  • The sliding scale for normal income tax purposes, for natural persons ranging from 18% - 45% is applicable, and not the fixed rate of 45% as applicable to other trusts.
  • The annual exclusion for capital gains tax (CGT) purposes at R40,000 per year.
  • The primary residence exclusion of R2 million of the capital gain on disposal for CGT purposes.
  • On disposal of personal-use assets by special trusts, capital gains or losses thereon may be disregarded.
  • Disregard capital gains or losses on compensation for personal injury, illness or defamation of the beneficiary.
  • Exclusion of the application of Section 7C - taxation on loans to trusts. 
SPECIAL TRUST TYPE B – Minors in an estate
 
This type of trust cannot be set up during a lifetime as minors are then still cared for, but only after a person passes away.  It is set up in terms of a person’s Will as a testamentary trust for minor children who are relatives of the deceased, who are alive on the date of death of the benefactor (including those conceived but not yet born) and the youngest of the beneficiaries is younger than 18 years on the last day of the year of assessment.  This type of trust will cease to be a special trust type B as from the beginning of the year of assessment in which the youngest of its beneficiaries turn 18.  These trusts are taxed on the normal individual person income tax scale, but do not offer benefits as far as CGT is concerned.
 
Tax concessions for special trust type B
  • The sliding scale for normal income tax purposes, for natural persons ranging from 18% - 45% is applicable, and not the fixed rate of 45% as applicable to other trusts.
  • Exclusion of the application of Section 7C - taxation on loans to trusts. 
Trusts can be quite complicated.  It is best to seek advice to ensure that the right structure is put in place to meet the clients’ needs.  EFBOE has a professional and experienced trust division, headed by Elmarie de Vos, elmariejhb@efboe.co.za.
 
Sources: Phia van der Spuy, Elmarie de Vos
https://www.iol.co.za/personal-finance/financial-planning/opinion-the-use-of-special-trusts-17803468
_______________________________________________________________________________________
 
VALME ROCHE’S  30 PIECES OF SILVER
 
Australian socialite and Lady Mayoress, Valme Roche, left each of her three daughters and ex-husband 30 pieces of silver in her Will. 

According to her Will, Roche stated that her daughters and her ex-husband would each receive “30 pieces of silver of the lowest denomination of currency”, “blood money due to Judas”.  The 30 pieces amounted to a total of $1,50 each. She died in 2009 at the age of 81, leaving an estate to the value of $3,5 million. Almost the whole amount was bequeathed to a Catholic charity organization for men called Knights of the Southern Cross.
 
The reason for this strange inheritance was that Roche was convinced that her three daughter and ex-husband plotted to kill Roche’s mother, Dorothy Maud Harber, for financial gain.  She left each of her three daughters equal shares in her jewelry as well, but with a stipulation:  The daughters had to study her personal diaries from January 1974 up to October 1981 and correctly answer questions before they could claim their inheritance.
 
The daughters contested the Will on the grounds that their mother was “delusional” which made her incapable of “making a reasonable and proper disposition of her estate”.  After a three-year court case, they finally managed to gain control of the estate in late 2012, by order of the Australian Supreme Court.
 
 
Until next time!
The “Let’s Talk EFBOE Team
 


Back to Blog Categories
[  HOME  ]   [  SERVICES  ]   [  FAQS  ]   [  BLOG  ]   [  CONTACT US  ]
© Copyright EFFICIENT BOE. All Rights Reserved. Website designed and hosted by LIT Creations. You are visitor number: 103887