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.

[Subparagraph (2) substituted by section 52(a) of Act 23 of 2020]

(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.

[Subparagraph (2A) inserted by section 52(b) of Act 23 of 2020]

(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-

(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).

[Sub­paragraph (4) amended by section 64 of Act 34 of 2019]

[Paragraph 80 amended by section 108 of Act 60 of 2001, section 58 of Act 20 of 2006, section 62 of Act 3 of 2008, section 86 of Act 60 of 2008, section 80 of Act 17 of 2009, section 150 of Act 31 of 2013, section 123 of Act 25 of 2015, section 75 of Act 17 of 2017 and substituted by section 87 of Act 23 of 2018 effective on 1 March 2019, applies in respect of disposals on or after that date]

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.

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.