Income Tax Act, 1962 (Act No. 58 of 1962)SchedulesEighth Schedule : Determination of Taxable Capital Gains and Assessed Capital Losses (Section 26A)Part XII : Trusts, Trust Beneficiaries And Insolvent Estates |
80. Capital gain attributed to beneficiary
| (1) | Subject to paragraphs 68, 69 and 71, where a trust vests an asset in a beneficiary of that trust (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, and determines a capital gain in respect of that disposal or, if that trust is not a resident, would have determined a capital gain in respect of that disposal had it been a resident— |
| (a) | that capital gain must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and |
| (b) | that capital gain or the amount that would have been determined as a capital gain must be taken into account as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary to whom that asset was so disposed of. |
| (2) | Subject to paragraphs 64E, 68, 69 and 71, where a trust determines a capital gain in respect of the disposal of an asset in a year of assessment during which a beneficiary of that trust (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 disposed of, an amount that is equal to so much of the amount to which that beneficiary of that trust 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 as a capital gain for the purpose of calculating the aggregate capital gain or aggregate capital loss of that beneficiary. |
[Paragraph 80(2) of the Eighth Schedule substituted by section 52(a) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021]
| (2A) |
| (a) | Subject to paragraphs 64E, 68, 69 and 71, this subparagraph applies where— |
| (i) | a beneficiary who is a resident (other than any person contemplated in paragraph 62(a) to (e)) derives an amount through vesting during a year of assessment from a trust that is not a resident; and |
| (ii) | that amount was derived directly or indirectly from that trust or another trust which is not a resident in respect of the disposal of an asset during the same year of assessment and that amount would have constituted a capital gain had the trust that disposed of the asset been a resident. |
| (b) | Where item (a) applies, the amount derived by the beneficiary must be taken into account as a capital gain for the purpose of calculating that beneficiary’s aggregate capital gain or aggregate capital loss for that year of assessment. |
[Paragraph 80(2A) of the Eighth Schedule inserted by section 52(b) of the Taxation Laws Amendment Act, 2020 (Act No. 23 of 2020), GG44083, dated 20 January 2021]
| (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 consists of or is derived , directly or indirectly, from an amount— |
| (i) | determined as a capital gain of that trust; or |
| (ii | which would have been determined as a capital gain of that trust had that trust been a resident, |
in any previous year of assessment during which that resident had a contingent right to that capital; and
| (b) | that capital gain or the amount that would have been determined as a 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 as a capital gain when determining the aggregate capital gain or aggregate capital loss of that resident in respect of the year of assessment in which that resident acquired that vested right.
| (4) | In determining, for purposes of subparagraph (1), (2) or (3), whether an amount would have constituted a capital gain had the trust been a resident, the provisions of paragraph 64B(1) and (4) must be disregarded in respect of an amount derived by that trust, directly or indirectly, from the disposal or in respect of an equity share in a foreign company if— |
[Words preceding paragraph 80(4)(a) substituted by section 64 of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG 42951, dated 15 January 2020]
| (a) | more than 50 per cent of the total participation rights, as defined in section 9D(1), or of the voting rights in that company are directly or indirectly held or are exercisable, as the case may be, by that trust whether alone or together with any one or more persons that are connected persons in relation to that trust; and |
| (b) | to the extent to which that amount is not derived from an amount that must be included in the income of or attributed to— |
| (i) | the resident to whom an amount is attributed in terms of subparagraph (1), (2) or (3); or |
| (ii) | a resident who is a connected person in relation to the resident referred to in subitem (i). |
[Paragraph 80 substituted by section 87(1) of the Taxation Laws Amendment Act, 2018 (Act No. 23 of 2018), GG 42172, dated 17 January 2019 - effective 1 March 2019 (section 87(2))
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.
[Paragraph 81 of the Eighth Schedule substituted by section 99 of the Revenue Laws Amendment Act, 2002 (Act No. 74 of 2002)]
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. |