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Income Tax Act, 1962 (Act 58 of 1962)

Schedules

Eighth Schedule

Determination of Taxable Capital Gains and Assessed Capital Losses

Part XII - Trusts, Trust Beneficiaries And Insolvent Estates

 

80.        Capital gain attributed to beneficiary

 

(1) Subject to paragraphs 68, 69, 71 and 72, where a capital gain is determined in respect of the vesting by a trust of an asset in a trust beneficiary (other than any person contemplated in paragraph 62(a) to (e) or a person who acquires that asset as an equity instrument as contemplated in section 8C(1)) who is a resident, that gain—
(a) must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and
(b) must be taken into account for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary to whom that asset was so disposed of.

[Subparagraph (1) amended by section 123(1)(a) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

 

(2) Subject to paragraphs 64E, 68, 69 and 71, where a capital gain is determined in respect of the disposal of an asset by a trust in a year of assessment during which a trust beneficiary (other than any person contemplated in paragraph 62(a) to (e)) who is a resident has a vested right or acquires a vested right (including a right created by the exercise of a discretion) to an amount derived from that capital gain but not to the asset, the disposal of which gave rise to the capital gain, so much of the capital gain as is equal to the amount to which that trust beneficiary is entitled in terms of that right-
(a) must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and
(b) must be taken into account for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary who is entitled to that amount.

[Subparagraph (2) amended by section 75(1)(a) of Act No. 17 of 2017]

 

(3) Where during any year of assessment any resident acquires a vested right to any amount representing capital of any trust which is not a resident, and-
(a) that capital arose from—
(i) a capital gain of that trust; or
(ii) any amount which would have constituted a capital gain of that trust had that trust been a resident,

determined in any previous year of assessment during which that resident had a contingent right to that capital; and

(iii) that capital gain has not been subject to tax in the Republic in terms of the provisions of this Act,

that amount must be taken into account for the purposes of calculating the aggregate capital gain or aggregate capital loss of that resident that year of assessment.

 

81.        Base cost of interest in discretionary trust

 

Despite paragraph 38(1)(b), a person’s interest in a discretionary trust must be treated as having a base cost of nil.

 

82.        Death of beneficiary of special trust

 

Where a beneficiary of a special trust dies, that trust must continue to be treated as a special trust for the purposes of this Schedule until the earlier of the disposal of all assets held by that trust or two years after the date of death of that beneficiary.

 

83.        Insolvent estate of person

 

(1) For the purposes of this Schedule, the disposal of an asset by the insolvent estate of a person shall be treated in the same manner as if that asset had been disposed of by that person.

 

(2) No person whose estate has been voluntarily or compulsorily sequestrated may carry forward any assessed capital loss incurred prior to the date of sequestration.