Paragraph 51 query


Could someone provide some clarity regarding the following situation:

A property is owned by a Will Trust with four beneficiaries. The Will Trust wants to transfer the property to the spouse of a beneficiary (this beneficiary is deceased).

  1. Would PARAGRAPHS 51 or 51A apply?
  2. Is the spouse considered a connected person in relation to the Trust?
  3. Date of disposal - date of vested interest?
  4. How would the base cost be calculated?
  5. Are there any further requirements to take into consideration in respect of the above situation?


Reader Comments:

Donald Moore 05/08/2011:

See the guidlines published by SARS

1. Para 51 could only apply if the disposal took place before 1 October 2010. In any event SARS has interpreted the para 51 provisions (wrongly I believe) as only permitting a transfer to 1 beneficiary. This does not apply to 51A.

2. A wife is a relative within the required degree and therefore is a connected person. Check the trust deed to see if it has any provision that would terminate the interest of the deceased on his death. Such a provision would preclude the wife from aquiring, not because of the legislation but because of the provisions of the trust deed.

3. It is necessary in order to comply with the Alienation of Land Act that there be a written record of the disposal. The date of that agreement is the date of disposal.

4. The base cost is of no interest to SARS or anybody else at this stage. It only falls to be determined when CGT is being determined persuant to a sale or other CGT event. All that is required at this stage is a value for the Deeds Office to be able to determine its fee and more significantly for the conveyancer to do the same. Municipal valuation will do but you can get an estate agent to give a market value if you wish to go to that trouble. Do not create any implication of any consideration being paid.

5. See the SARS Guidlines.

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