The shares in your company cost you R120 or R100 depending on whether we registered the company or someone else did and they are now worth R1m. Incidentally, the reason we issue 120 shares is that 120 can be divided by 1, 2, 3, 4, 5 and 6, so you can have any of those numbers of equal shareholders.

You now want the company to be owned by your trust. You can donate it and pay 20% Donations Tax on R1m – R150K (the Annual allowance) or sell it and pay up to 18% CGT on R1m – R120 (the original cost of the shares). But, is there another solution?

In most cases, the answer is “Yes”. Here’s how:

Register a new company and issue the shares to your trust. Start invoicing from the new company, but keep paying the bulk of the expenses from the old one. Gradually, the value of the old company diminishes and the value of the new one grows.

You have effectively shifted the company (actually, the business) into the trust structure with no tax consequences.

There is, however, a hidden cost. It is that the old company will be making a loss without a tax benefit, and the new company will be paying more tax because it doesn’t have the expenses.