The purpose of this communication is to inform clients of certain tax increases and proposals that will have an effect on Estate and Financial Planning. Only those changes and proposals directly affecting Estate Planning will be dealt with.


Dividend income paid to shareholders was taxed at a rate of 15 per cent. The dividend withholding tax rate was increased by 5 percent to 20 percent.

The new rate is applicable to all dividends declared on or after the 22nd of February 2017.


The inclusion rates, which increased substantially in the 2016 budget, has remained unchanged for the 2017/2018 tax year. However, the increase in the marginal tax rate for individuals and trusts have an effect on the effective rate of Capital Gains Tax.

2.1 Individuals/Special Trusts:

  • Inclusion rate: 40% (remains unchanged)
  • Maximum effective rate: 18% (currently 16.4%)

2.2 Companies:

  • Inclusion rate: 80% (remains unchanged)
  • Effective rate: 22.4% (remains unchanged)

2.3 Trusts:

  • Inclusion rate: 80% (remains unchanged)
  • Effective rate: 36% (previously 32.8%)

2.4 Annual exclusion and exclusion on death:

  • Annual exclusion:R 40 000 (remains unchanged)
  • Exclusion in year of death: 300 000 (remains unchanged)

Effective for years of assessment commencing on or after 1 MARCH 2017.


There has been certain adjustments to the Transfer Duty rates. The duty free threshold has been increased from R750 000 to R900 000. On transfers of property valued above R10 000 000 Transfer Duty will amount to R933 000 (previously R937 500) plus 13% of the value above R10 000 000.

The rates between R900 000 and R10 000 000 has been adjusted proportionately.

Effective for property acquired on or after 1 MARCH 2017.


No amendments to the rate or legislation was announced.


No amendments.


In order to curb the use of interest-free or low-interest loans to finance the acquisition of assets by trusts, Section 7C was enacted as discussed in numerous previous circulars.

Section 7C does not apply to interest-free or interest-free loans to a company, even if the shares are held by a trust. This was discussed with SARS and Treasury during discussions of this section, but no changes in this regard ensued.

This “omission” clearly was too obvious to be overlooked by the legislator. For this reason the following statement contained in the Budget Review is, to say the least, perplexing:

“However, some taxpayers have already attempted to circumvent the anti-avoidance measure by making low-interest or interest-free loans to companies owned by a trust. To counter abuse, it is proposed that the scope of this anti-avoidance measure be extended to cover these avoidance schemes.”

At this point in time we have no indication of what the legislation will entail. Suffice to say that it will not be easy to draft.


Mention was made that the report of the DTC on Estate Duty will receive attention in the 2018 budget.


“In duplum” rule

The effect of this rule is that interest ceases to accrue when the amount of interest accrued equals the outstanding principal debt. It is proposed that the rules dealing with low-interest or interest-free loans be amended to explicitly exclude the application of the “in duplum” rule in order to ensure the efficacy of these rules.

Future of trusts

We maintain that trusts still have a place in the Estate Planning environment.

Choose your advisor carefully on the basis of:

  • Expertise in the field;
  • Trustworthiness;
  • Ability to keep abreast of new developments affecting your estate plan.

You will be kept up to date on developments in this regard.

For any enquiries contact our specialists below:

GPJ van den Berg | | T: +27 (12) 361 5001 | F: +27 (12) 361 6311

WC van der Merwe | | T: +27 (12) 361 5001 | F: +27 (12) 361 6311

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