Trust beneficiaries take SARS to court

SARS is attempting to collect transfer duty dating back to 1998 from these trusts. Many individuals who became beneficiaries of trusts were led to believe, often by estate agents, that changing the names of the beneficiaries in a trust, rather than purchasing property in their own name, was a legitimate way of acquiring property and that no transfer duty was payable in these instances.

After the Transfer Duty Act was amended last year transfer duty became payable in discretionary trusts when the names of one or more beneficiaries, with a contingent right to any (residential) property, are changed or added. It has been estimated that SARS expects to collect R10.7m in this way. The SARS' case hinges on the (historic) definition of a "transaction" in the Transfer Duty Act, and whether a change of beneficiaries who only have a contingent right or expectation to share in the property owned by the trust can constitute an "acquisition of property" upon which transfer duty is leviable.


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