Page 23 - GA Maclachlan Tax Guide 2024

Loans by a natural person or a company to a company is also subject to
donation tax on the same basis if 20% or more of the shares of the company
is held directly or indirectly by a trust (or beneficiary of trust or spouse of
beneficiary)� Preference shares issued by a company are also regarded as loans
for this donation tax calculation�
The following will be specifically excluded from the above donation provisions:
■ special trusts that are created solely for the benefit of disabled persons
■ trusts that fall under public benefit organisations
■ vesting trusts (in respect of which the vesting rights and contributions of the
beneficiaries are clearly established)
■ loans used by the trusts to fund the acquisition of a primary residence
■ loans that are subject to transfer pricing provisions
■ loans provided to the trust in terms of a sharia-compliant financing
arrangement, or
■ loans that are subject to dividends tax
■ loans to employee share purchase trusts
The lender may utilise the annual donations tax exemption of R100 000
(or remaining portion if applicable) against this deemed donation�
No deduction, loss, allowance or capital loss may be claimed for the reduction,
waiver or other disposal of such a loan, advance or credit by the lender�
Other anti-avoidance provisions
Anti-avoidance provisions exist to combat the use of trusts for income splitting
and tax avoidance schemes� These provisions will normally be applicable where
income accrues to a person other than the donor as a result of a donation,
settlement or other disposition made (i�e� interest free loans)� These provisions
may apply where income accrues to the following persons:
■ The donor’s spouse
■ A minor child of the donor
■ The trust to whom the donation, settlement or other disposition has been made
■ Non-residents
The result of the anti-avoidance provisions are that the income that accrues to
the person’s mentioned above are deemed to be the income of the donor�
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