Taxation of a (previously non-resident) resident on income earned
06 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Taxation of a (previously
non-resident) resident on income earned from assets donated to a foreign trust
prior to RSA tax residency
Q: A non-resident
created an offshore trust in 2001 and then in 2002 became resident in South
Africa. His assets were donated to the foreign trust prior to him becoming
resident in SA for tax.
My view is the resident will be taxed on the income in SA as
an attribution regardless of the fact the donation was made prior to him
becoming a resident.
A: "Where by
reason of or in consequence of any donation, settlement or other disposition …
made by any resident…”
In the context of what section 7(8) aims to achieve we
submit that it may be possible to argue that the donation, settlement or other
disposition was not made by a resident and therefore that the section does not
For the application of the other subsections we submit that
they can apply.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.