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Exchange Control Amnesty and Amendment of Taxation Laws Act, 2003 (Act No. 12 of 2003)

Chapter I : Exchange Control Amnesty and accompanying tax measures

Part A : Definitions, Administration and Application

4. Special rules for donors to and beneficiaries of discretionary trust

 

1) A person who is a donor (or the deceased estate of a donor) or a beneficiary in relation to a discretionary trust, which is not a resident, may elect that any foreign asset contemplated in subsection (2), which was held by that discretionary trust on 28 February 2003, must be deemed to be held by that person.

 

2) Subsection (1) applies in respect of a foreign asset of a discretionary trust which –
a) was acquired by that discretionary trust by way of a donation;
b) has been wholly or partly derived from any unauthorised asset or from any amount not declared to the Commissioner as required by the Estate Duty Act, 1955, or the Income Tax Act, 1962: and
c) has not at the time of that election vested in any beneficiary of that discretionary trust.

 

3) Where a person has made an election as contemplated in subsection (1) in relation to a asset –
a) that person must be deemed to have held that foreign asset –
i) for purposes of this Chapter, from the date that the discretionary trust acquired that foreign asset, and
ii) for the purposes of the Income Tax Act, 1962, (other than Part V and VII of Chapter II of that Act) from the first day of the last year of assessment ending on or before 18 February 2003, until that foreign asset is disposed of by that discretionary trust to any other person, in which case that person shall be deemed to have disposed of that foreign asset for consideration equal to its market value on the date of disposal; and
b) the provisions of sections 7 (5) , 7(8) and 25B of the Income Tax Act, 1962, and paragraphs 70, 72 and 80 of the Eighth Schedule to that Act, shall not apply in respect of any income. expenditure or capital gain relating to that foreign asset, while it is so deemed to be held by that person.

 

4) In order to make the election contemplated in subsection (1), the person must acquired that foreign asset; and submit the founding document of the discretionary trust as at 28 February 2003 with the application in terms of section 5.