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Trusts and capital gains tax

11 August 2019 5:00 PM
Tags:
Financial planning
Paul Roelofse
Capital gains tax
structuring a fund
Certified financial planner Paul Roelofse says great care has to be taken with the structuring of a trust.

South Africans have been liable for capital gains tax since 2001 as part of their income tax when disposing of an asset which results in a gain.

There's a perception that this form of tax can be avoided by people with the funds to start a trust or a charitable foundation.

RELATED: How to get a tax refund from Sars

Certified financial planner Paul Roelofse says capital gains tax can be avoided in certain instances, but care has to be taken with the structuring of such an entity.

There are various terms and conditions that apply, but in general you can't avoid paying tax if you make a gain on an asset.

Paul Roelofse, Certified financial planner

Capital gains tax in a trust is becoming pretty expensive.

Paul Roelofse, Certified financial planner

Roelofse cautions that if a client decides one day to sell the asset within a trust, there aren't the same exclusions or rebates that would apply to an individual.

Your rate of tax is going to be far higher than if it was in your own hands, so you also have to do a very careful calculation around that before you enter into that entity.

Paul Roelofse, Certified financial planner

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11 August 2019 5:00 PM
Tags:
Financial planning
Paul Roelofse
Capital gains tax
structuring a fund