Benefits of a Property Shareholding Trust and a Company Structure
Individual | Trust | Company | |
---|---|---|---|
Income Tax | 41% | 41% | 28% (15% dividends withholding tax thus effective tax rate if dividends are paid is 38,8%) |
Capital Gains | 41% x 40% = 16,4% | 41% x 80% = 32,8% | 28% x 80% = 22,4% |
Tax Planning |
|
|
|
Death of an individual | At death the individual is liable for: | The Trust continues and is therefore not liable for the same tax/costs as per the death of an individual | The company continues and is therefore not liable for the same tax/costs as per the death of an individual |
Estate duty | 20% | N/A | N/A |
Capital Gains Tax | 41% x 40% = 16,4% | N/A | N/A |
Executor's Fees | 4% | N/A | N/A |
Accounts are put on hold when an individual dies | N/A | N/A | |
Protection | No protection against creditors | Protection if structured properly | Protection if structured properly |
Funding | Process is simplified | Trust registration required | Shelf companies are available but shareholding needs to be transferred to the trust |
Can get up to 100% finance | New Trust up to 80% | New Company up to 80%. A delay in trust registration may result in a potential transfer duty or CGT liability | |
Tax | N/A | Flexibility in tax planning in terms of the conduit principle Trustees have discretion |
Lowest Income Tax All shareholders receive same dividend |
Administration | One tax return | Trust return is complex | No audit required |