PROPOSED CHANGES TO TAX LAW IN SOUTH AFRICA: INTERESTFREE LOANS AS A TOOL IN ESTATE PLANNING?

Yıl 2016, Cilt: 8 Sayı: 2, 237 - 254, 01.12.2016

M. J. Preston H. Kloppers

Öz

Estate planning often involves the sale of an asset by an estate planner (the owner
of the asset) to an inter vivos trust, as a related family trust. It also often happens
that the buying trust does not have the necessary funds to pay the purchase price.
In this situation it is common practice to finance the sale by means of an interestfree
loan agreement. The buying trust becomes the owner of the property, while
the purchase price remains due and payable to the seller, without the loan amount
accruing interest. The result achieved by the estate planner is that potential further
growth of the asset soldis shifted to the trust, resulting in an estate duty benefit for
the seller. The debate surrounding the use of the interest-free loan as an estate
planning tool has been polarised for years with most researchers concluding that
the interest-free loan remains a useful estate planning tool. Doubts regarding the
use of such agreements and the trust for estate planning have recently neem
renewed. Since 2013, several statements by the different Ministers of Finance, in
their respective budget speeches, indicated that government will propose tax
avoidance legislation that will directly impact the taxation of trusts and connected
parties to a trust. This study will focus on the effect which the recent proposed
changes to the Income Tax Act (58 of 1962) might have on the use of interest-free
loans as an estate planning tool. The study is qualitative in nature with document
analysis at its core. The main aim is to provide more clarity to estate planners in
this regard. The research concludes that the interest-free loan still has some
advantage as an estate planning tool, but if estate planning is done with only tax
planning and tax savings as motivation, that advantage may disappear.

Anahtar Kelimeler

Trusts, interest-free loans, income tax, taxation, estate duty, Wealth tax

Kaynakça

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