Donations and Estate Duty

Question 1

Can one still pay donations Tax if they are a non-resident?

Answer 1

Section 54 of ITA
- You will be exempt from donations Tax if you are a non-resident

Question 2

What is the Rate for Donations Tax?

Answer 2

Section 64 of ITA
- For the first 30 million, 20%
- for anything above 30 million, 25%

Question 3

is there an exclusion for donations Tax?

Answer 3

Section 56 of ITA
- natural persons receive an annual exclusion of 100000 on donations
- companies can make a sum of casual gift donations (gifting not from reward) of up to 10 000 to any employees (in proportion to how long or short the year of assessment was(x/12))

Question 4

what happens if you advance a loan to a connected person that is interest free?

Answer 4

Section 7C
- they will need to pay donations tax on the value of the interest that would be paid in normal market at the end of every year

Question 5

What is estate duty levied at?

Answer 5

Section 7 of EDA
- For the first 30 million, 20%
- for anything above 30 million, 25%

Question 6

How do you calculate estate value?

Answer 6

section 4 of the EDA
- Estate Value = assets - (allowances + exemptions)
-

Question 7

are there any exclusions for estate duty?

Answer 7

Section 4(5) of the EDA
- speaks about the abatement amount which acts like an exclusion of 3500000 and its for deceased persons

Question 8

What happens if you bequeath things to your spouse on your death?

Answer 8

Section 4(q) of the EDA
- anything that has been bequeathed to your spouse receives an exemption from being included in your estate upon death

Question 9

What happens if you have foreign country items included in your estate?

Answer 9

section 4(e)
- any movable property that is residing in another country is deducted from the estate

Question 10

How do you calculate the usufructuary and the bare dominium of property?

Answer 10

Section 5(b) of the EDA
- Annual value (12% of market value) capitalized @ 12% over the life of the beneficiary or a shorter period if it is less than life expectancy
- note that donations Tax is based on the life of the doner
- less any amount that was paid to the owner by the beneficiary with 6% p.a. attached FOR THE USUFRUCTUARY
- THEN LESS an any amount that was paid to the owner by the beneficiary with 6% p.a. attached FOR THE BARE DOMINIUM

• the Value of the usufructuary above is limited to the MV less the value of the bare dominium IF the person has ownership of both the bare dominium and the usufructuary AND they were created at the same time

Question 11

who is liable for the estate duty?

Answer 11

section 11 of the EDA
- the person who gets advantage from the property of the deceased will be liable for the estate duty on that property

Question 12

What items are deemed property in your estate?

Answer 12

Section 3(3) and section idk of the EDA
- domestic life policy
* proceeds - (premiums paid * 106%)
* unless the policy is given to your spouse or your child as part of an ante or post nuptial contract
* unless it is bequeathed to your spouse
* unless it was taken out by a partner/ member/ shareholder and no premiums were paid by the deceased
* unless the policy was not for the deceased, so premiums were not paid by the deceased and its not payable to his estate

Question 13

What are the allowable deductions from your estate?

Answer 13

Section 4 of the EDA
- deathbed, masters and executors fees
- normal tax liability
- foreign property?
- anything bequeathed to your wife

Question 14

If someone donates income earning assets to a minor, what are the tax consequences?

Answer 14

Section idk of idk
- it gets deemed to be in the taxable hands of the adult who donated it