donations Archives

Our CRM system recently sent reminders to all of our trust clients to donate R100 000 to their trust owned company before the 28th of February. Here’s why – Every natural person is allowed to donate a total of R100 000 each tax year free of Donations Tax (which otherwise is 20%). If you (and perhaps your spouse) donate R100 000 on loan account for the next 5 years, you will then owe the company R500 000 and have shifted R500 000 out of your future deceased estate. Say the company then wants to raise a bond to buy an…

Does it make sense to donate assets to your trust structure? Oddly enough, despite Donations Tax, it sometimes does. There are two ways to move owned assets into a trust structure. Let’s look at the most common method – 1) Sell the asset on loan account. Because the trust and its company are connected persons to the seller, the transaction will be deemed to be at market value for all tax purposes. Let’s say that the asset cost R4m and the deemed market value is R6m. The seller will pay Capital Gains Tax and, if the asset is fixed property,…

I often get a call from someone whose creditors or spouse are after them and he or she urgently needs a shelf trust so that he/she can move their assets into it to protect them. That is exactly what trusts cannot do. It’s the word “move” above that is the problem. There are only two ways to move assets into a trust. You can either donate them or sell them to the trust. Let’s look at each of these in turn. Donating your assets The problem here is Donations Tax, which is 20% of the total value of your donations…

Any natural person can donate a total of R100 000 each tax year free of Donations Tax, so, if you want to protect your household goods and motor vehicles from creditors, buy an old shelf trust. Your first donation would be dated in the first February in which the trust existed, the second a few days later in March and then every March thereafter. You and your spouse don’t have R200 000 floating around for each donation, so you simply record the donations and agree to owe the money to the trust. Then you take a very detailed inventory of…

donations

Why you should donate R100K to your trust owned company

Donating assets to a trust

What a Trust cannot do

Why an old shelf trust can be so useful