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
  • Flexibility in tax planning in terms of the conduit principle
  • Trustees have a discretion
  • Trust returns requires detailed info/complex
  • Lower income tax rate than the trust tax rate
  • All shareholders receive same dividend
  • Audit not required
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