Minimise your estate duty and Capital Gains Tax and maximise your investment returns before the end of February

Did you know that the donations you make during your lifetime do not form part of your personal estate on death? And donations made by you up to R100,000 annually, are exempt from donations tax?

Therefore, you and your spouse should each be donating R100,000 per tax year to your Family Trust. And your combined estate will be reduced by R1 million over a 5-year period. That translates to an estate duty saving of R200,000!

However, there is one proviso – the donation of R100,000 per year must be made into the Trust’s bank account to avoid the deeming of Capital Gains Tax on the donation.

The R100,000 paid to the Trust can then be:

  • Paid back to you in the following year to reduce the value of your loan account in the Trust and the asset in your personal estate or create a liability in your personal estate to set off against your assets and reduce your estate duty payable; or
  • Invested in a growth asset that maximises your returns with no adverse tax consequences in your personal estate and the asset is protected from any personal or business risk factors

So take advantage of this tax saving opportunity and make your donations before the end of February, being the end of your tax year.

In the event that your Family Trust does not have a bank account or should you wish to wisely invest your Trust donation, please contact Karen Venter at our offices to assist you with the transactions.

Review your CGT profile and ensure your liability is minimised and you maximise the use of the Exemption available.

Important questions to ask yourself – > Am I intending on selling investments (or have I had transactions which trigger CGT already this year) before 28 February in my personal hands? Does it exceed the annual exemption of R17 500? Would the brokers fees on selling CGT loss assets to offset the taxable gain be more than the increase in base cost should I re-purchase my investment the next day?

Please do not hesitate to contact us should you have any queries in this regard.

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