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Taxation of a (previously non-resident) resident on income earned

06 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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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 find application.  

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.


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