Is SARS going after trusts?
This is such a common perception that one can’t help wondering how it started.
Perhaps because trusts are taxed at 45%. I can think of no other reason. So let’s deal with that one.
A properly constructed trust will never pay tax. Why? Because the only assets it should own are shares in companies and, possibly, non-income producing assets such as the founder’s home.
Companies are taxed at 27% and that’s where all the action is. In the unlikely event that the company declares a dividend, it will be subject to 20% Dividends Withholding Tax whether it is owned by a trust or an individual.
Trusts are an absolute must for anyone who is building wealth because when you die, you will lose about 1/3rd of your wealth in tax. But when you die your trust, where the wealth sits, does not die so, your death is not a tax event for the trust.
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“Trusts are an absolute must for anyone who is building wealth because when you die, you will lose about 1/3rd of your wealth in tax.”
Can’t help wondering if you’ve found a way to take the other 2/3rds with you 🙂
Where to, Fred? Rather leave the 3/3rds in a trust
Point appreciated , what are the initial and ongoing cost to maintain a Trust
Hi Haroon,
To set up a trust, we do a discounted full package which includes the trust registration, tax registration and complimentary wills. The fee is R16 100.
Thereafter the ongoing costs are R7 500 per annum for my Independent Professional Trustee’s fees. You need this if you wish the trust assets to be protected from your creditors. If that doesn’t worry you, then you do not need it.
Plus Annual tax return for the trust R3 680 is the only other maintenance cost assuming the trust is properly structured.
By the way, Trusts are taxed at 45% – there was a compilation error which we have now corrected.
45% trust tax rate
Oh dear Regine,
Silly slip