Section 7C of the Income Tax Act explained
What is section 7C? This section of the Income Tax Act is an anti-avoidance measure aimed at transactions between connected persons and trusts, where a trust is funded by low interest or interest-free loans. This is usually done to ensure that assets form part of the trust’s capital, and the funder (who is usually a […]
FURTHER REFINEMENTS TO THE ATTACK ON INTEREST FREE LOANS TO TRUSTS
We previously reported on the introduction of section 7C of the Income Tax Act, 58 of 1962. In terms of this targeted anti-avoidance provision, National Treasury sought to attack interest free loans granted to trusts by connected persons of that trust. Typically, these loans would have arisen by virtue of an individual that would sell […]
FINAL AND DILUTED LEGISLATION IN RELATION TO LOW INTEREST LOANS AND TRUST
The renewed focus by National Treasury on the taxation of trusts was widely anticipated and it came as little surprise earlier this year that the first version of the Draft Taxation Laws Amendment Bill, 2016, introduced what will become the new section 7C of the Income Tax Act, 58 of 1962. Much has since been […]