1. Practical Application of Trusts- From the Bedroom to the Boardroom Hoosen Agjee 2 nd February 2010 www.TaxBenefits4ngos.co.za Business solutions for commerce & NGOs
14. 35 % Company Tax Net Profit Rental income R 500 000 R 500 000 R 175 000 R 325 000 R 175 000 Net to S/holders R 325 000
15. Individuals pay Tax Net Profit Rental income R 500 000 R 500 000 R nil R 500 000 R Nil R 500 000 Income to Individuals
16. SPOUSE 3 Individuals receive R 500 000 SON www.TaxBenefits4ngos.co.za Income Tax 165 000 20 000 170 000 20 000 165 000 20 000 DAUGHTER Total Tax = R 60 000 !! www.TaxBenefits4ngos.co.za
17. Taxed on TOTAL Income R 50 000 R 150 000 R 20 000 R 1 260 Tax Trust income Salary
18. Capital Gains Tax Gain ½ Gain Taxable CGT @ 40 % Share Gain Gain ¼ Taxable CGT @18% 240 240 240 240 60 60 60 60 -16 -16 -16 -16 1 1 1 1 44 44 44 44 Tax = R 4 000 R 188 000 SAVED = R 960 000 = R 480 000 = R 192 000 Rebate
19. Estate Duty R 1 m (2010) Value Today R 6 m (2020) Estate Duty 20 % on R 6 m = R 1.2 m Value Date of Death Asset in name of individual
20. Estate Duty Value Today R 1 m Asset owned in a Trust Value at death R 6 m 20% Estate Duty on R 1 m = R 200 000 m R 1 000 000 SAVED
21. HEIRS Your Heirs in terms of the Islamic Law of Succession
22. Donations Tax 20 % Donations Tax Assets over R 100 000 GIVEN AWAY Free Of Charge or at Below Market Value
23. Parent gives to child Parent Child gets takes 20 % Parent gives R 600 000 - R100 000 R 500 000 = R100 000 Child
24. Trust Gives to Child Trust Child gets NO Donations Tax Trust gives R 600 000 - R nil R 600 000 = Child
25. SUCCESSION PLANNING Assets owned in Co / CC Heir Sold to Heir R 1 000 000 Heir owes you Pay estate duty on this loan Heir pays duty on asset value at date of death HIGHER VALUE
26. Using a TRUST Assets owned in TRUST Heir Given to Heir If heir is a trust NO estate duty is payable on death of heir NO ESTATE DUTY
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31. Child Trust gives to individual Transfer Parents Trust R 100 R 100 - 10 On hand 90 R 90 BELONGS to child
32. Child lends to Parent’s Trust Parent’s Trust Child R 90 Surplus R 90 Parent’s Trust owes Child R 90 Child lends to Parent’s trust
33. Child’s Trust Parent’s Trust R 100 Child - 10 Surplus 90 R 100
34. Parent’s Trust Child’s Trust Child R 90 Child Trust has loan in Parents Trust Received from HIS trust Child lends to his trust Trustees lend to Parent’s trust Lending money R 90 Child has loan acc in his trust Trust owes child R 90
35. Child’s Trustees Child Child deals with Trustees Control Child’s Trust
36. Parent’s Trust Child’s Trust Child Child’s trustees deal with Parent’s trustees Individual not involved
39. ‘ Our trusts work for you from the bedroom to the boardroom’ With a TPC Trust you benefit from our experience and all that we learn from our clients who come with unique and varied family, cultural and financial needs.
40. Visit our website: www. TaxBenefits4ngos .co.za Family Trusts for individuals Trust Deeds/ Constitutions & Section 21 Co’s. for NGOs Formation of CCs Estate planning and Wills Business solutions for Commerce & NGOs Produced by: Cave Man inc (031) 207 3323
41. Conclusion Asset protection Give to Minors Estate Duty MAINTAIN CONTROL Succession planning Save Income Tax No Donations Tax
42. Recepient pays tax on income received from the trust at progressive rates Income trust Tax Payable Tax rate R 50 000 R 3 600 7.2 % 70 000 5 400 7.7 % 100 000 14 500 14.5 %
44. TRUST’S INCOME R 180 000 TOTAL TAX Only R 9 000 Only 5 % Trust income R 180 000 to beneficiaries R 180 000 Wife 60 000 Son 60 000 Daughter 60 000 3 000 3 000 3 000 NiL
45. Recepient pays tax on income received from the trust at progressive rates Income trust Tax Payable Tax rate R 50 000 R 3 600 7.2 % 70 000 5 400 7.7 % 100 000 14 500 14.5 %
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