The answer to this query is based on legislation
would value your assistance on the following matter. We have
researched, using the Comprehensive Capital Gains guide issued by SARS, but
have been unable to determine whether our conclusions are correct.
purchased immovable property February 2000. A usufruct was registered in
favour of one of the beneficiaries of the Trust. The value of the
usufruct was determined to be R373 012.32 and the Trust paid the
transfer duty on this value. The Trust sold the property last month (Feb 2014)
for R2 000 000. The current value of the usufruct if
R1 591 224. The Trust has paid the transfer duty to cancel
What is the position of the usufructuary? When he was granted the usufruct, no money changed hands. He has
now conceded to the cancellation of the usufruct and no money has changed
hands. Would we be correct in concluding that the disposal of the
usufruct with no payment does not trigger a capital gains event in the hands
of the usufructuary?
A: The problem here is that the usufruct still had value as it did not
expire but rather abandoned by a connected person to the trust. My view is
that par 38 of the 8th Schedule may well apply. The usufructuary should have received
a base cost in terms of par 38 when she received the usufruct.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.