Author Archives: Delport van den Berg Inc.

Conveyancing documents signed outside of South Africa

It is not always possible for a client to sign their transfer and bond documents within South Africa.  Certain circumstances necessitate that a client sign documents outside our borders. Definitive rules have been formalised to ensure that documents signed overseas, can be used in South Africa. The country of signature will determine which rules / formalities must be followed.

According to Rule 63(1) of the UNIFORM RULES OF COURT (High Court Rules), the terms “document” and “authentication” are defined as being:

‘document’ means any deed, contract, power of attorney, affidavit or other writing, but does not include an affidavit or solemn or attested declaration purporting to have been made before an officer prescribed by section eight of the Justices of the Peace and Commissioners of Oaths Act, 1963 (Act 16 of 1963);

 ‘authentication’ means, when applied to a document, the verification of any signature thereon

Rule 68(2) specifies that any document executed in any place outside the Republic shall be deemed to be sufficiently authenticated for the purpose of use in the Republic, if it is duly authenticated at such foreign place by the signature and seal of office “of the said foreign place.

The official procedures can be summarised as falling into one of three categories:

  1. Notary Public – Rule 63 (2)(e):

Documents signed in the United Kingdom of Great Britain and Northern Ireland or in Zimbabwe, Lesotho, Botswana or Swaziland can be signed (authenticated) in front of a Notary Public;

  1. Countries not forming part of the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (“Apostille Convention”)

Rule 63 of the UNIFORM RULES OF COURT (High Court Rules) will apply. The documents can be signed in front of

  • the head of the South African diplomatic or consular mission; or
  • a person in the administrative or professional division of the public service serving as a South African diplomatic, consular or trade office abroad; or
  • any Government authority of such country charged with the authentication of documents under the law of such country; or
  • the consul-general; consul; vice-consul or consular agent of the United Kingdom.

An example hereof would be, signing at the South African Embassy, in that foreign country.

  1. Countries which are parties to the Hague Convention:

Both countries need to be part of the Convention. The Convention aims to simplify the procedure for legalization of documents, to verify their authenticity, in order to be valid internationally.

The required documents must be:

  1. Signed by the signatories;
  2. Authenticated, by either placing an Apostille certificate on the document or attaching it thereto;
  3. The Apostille must be in the form prescribed form – as set out in the Convention and
  4. be issued and signed by, and bearing the seal of office of, the competent authority of that country.

Who the competent authority is will vary from country to country. A list of competent authorities for each country, can be found on  as well an example of the prescribed form of the Apostille. A full list of the participating countries can be found on

It is advised that the client obtain legal advice, when they require documents to be authenticated. This would avoid unnecessary delays in the conveyancing process, resigning of documents, and to ensure that all the required formalities are adhered to.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

New South African plug standard is mandatory

The South African Bureau of Standards recently, after much deliberation, amended the standard wiring code for the installation of new plug sockets in new buildings. These amendments have been formalised in the amended SANS 10142/1 – 2017 wiring of premises standards.

In terms of the amended wiring standards, which came into effect in January 2018, the old South African plug with the three prongs, known as the SANS164-1(the old plug), will gradually be phased out and replaced with the SANS164-2 (new plug) in all new installations for low voltage usage. This means that each plug point installed in a new building must have at least one socket that can accommodate the new plug.

The new plug has the same hexagonal profile as the Euro plugs on cell phone chargers, but it will include a third earth pin. The illustration below indicates how the new plug must look, setting out the old plug, Euro plug and new plug.

The reason for the change is the fact that the new plug is much safer than the old plug and it was intended to comply with a universal, international standard.  However, only South Africa and Brazil has opted to accept the new plug standard. South Africa will therefore again have a plug standard different to that of the rest of the world. However, the euro plug will be compatible with the new South African plug.

The SANS10142-1- 2017 amendment relating to the new SABS wiring standards states as follows:

“16.5 Outlets

Except where otherwise specified in this part of SANS10142-1 single phase socket outlets for general use (also 14.1.4) shall :

  1. a) be of the two- pole earthing contact type
  2. b) comply with SANS164-0
  3. c) effective from January 2018, all socket outlet points for new electrical installations must include at least one socket outlet complying with the dimensions of SANS164-2 (new plug).  Socket outlet points may also include socket outlets complying with the dimensions of SANS164-1 (old plug).

It is accordingly suggested that the socket as set out below, or a socket similar thereto be installed in new buildings:

Non-compliance with the new wiring code

We are of the opinion that non-compliance with the new wiring code constitutes a direct non-compliance with the Occupational Health and Safety Act (Act No. 85 of 1993) hereinafter referred to as the ÓHS Act. The OHS Act is administered by the Chief inspector of Occupational Health and Safety of Department of Labour, which requires that electrical installations comply with the requirements of SANS10142-1. It also requires that a registered person, as defined (master installation electrician, installation electrician or electrical tester for single phases), will issue a certificate of compliance (known as an electrical compliance certificate) together with a test report.  The certificate shall be in the form of the certificate of compliance published in the electrical installation regulations, 2012, and the test report shall be in the form of the test report in that part of SANS10142.

It is our view that new buildings erected after January 2018, as well as renovations and upgrades to buildings, must comply with the new standard and that the minimum requirements of the SANS10142 as set out above relating to the new plug must be adhered to.

Should the new standard not be adhered to an electrical compliance certificate cannot be issued. Non- compliance may also cause the local building inspector not to issue an occupation certificate for new buildings. By not being in possession of the aforesaid certificates the effect shall be that a new building can possibly not be sold or transferred into a new owners’ name unless compliance is reached.

For old building and existing sockets the new norm need not be complied with retrospectively and the new wiring code is only applicable with regards to new plugs and installations for new buildings and renovations from January 2018.

Non-compliance may have dire consequences on especially residential property developers.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Aspects to consider when buying a business or a company

There are many aspects to be considered when buying a particular business to ensure that you are making the correct (and hopefully profitable) decision.

In the commercial world transactions for the acquisition of a business takes the form of either a sale of business agreement or a sale of shares agreement.  The transactions are distinct from each other and have different legal consequences.

Purchasing a business means that you are acquiring ownership from an individual or a company of assets which generates an income as well as liabilities (debts) which were incurred in generating that income.  Generally, the seller will be liable for all debts of the business until take over by the purchaser.  The sale may also include aspects regarding contracts entered into with suppliers and customers, intellectual property rights (designs or trade marks), accounts receivable and cash in the bank.

Purchasing shares in a company means that you are acquiring ownership of a legal entity which has separate legal personality and which owns and operates a business (or several businesses).  The purchase of shares in a company will include all the debts incurred by the Company before the shares are transferred (i.e. suppliers, SARS, or third parties).  This is generally why purchasers usually insist on a proper due diligence investigation into the affairs of the company concerned.

A sale of business agreement may be more appropriate if there is uncertainty about undisclosed liabilities, if all shareholders of the company are unwilling to sell their shares, or if the company conducts more than one business.

A sale of shares agreement may be more appropriate if important agreements are entered into by the company (i.e. license or supply agreements) which are incapable of transfer, the shareholders of the company insist on selling their shares rather than selling the business out of the company, or tax considerations would be more favorable.

It is always advisable to obtain comprehensive legal and tax advice to avoid unforeseen and unwanted legal consequences after acquiring your business.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Protection of primary residence during the foreclosure process

The main purpose of the insertion of Rule 46A in the Rules of the High Court is to try and obtain a constitutional balance between the rights of execution creditors and judgment debtors, especially as access to housing is a fundamental human right entrenched in the South African constitution.

The insertion effective from 22 December 2017 has had the implication that the foreclosure process for execution creditors (credit providers) has become more intricate. This rule is applicable in instances where an execution creditor applies to Court for an order to sell the property at a sale in execution due to the judgment debtor’s mortgage bond account being in arrears.

The Court will assess all information in order to make an informed decision as to whether execution against the property is warranted, which includes the following :

  • Whether the property is the primary residence of the judgment debtor.
  • Whether the Application was served personally on the judgment debtor, unless the Court orders service in any other manner.
  • The execution creditor needs to provide the Court with the market value of the property, the local authority valuation, all amounts owing on the mortgage bonds registered over the property, all amounts owing to the local authority and to a body corporate or home owners association (if applicable).

A judgment debtor or any interested party on which the Application has to be served i.e. the municipality, body corporate, home owners association or tenant, is allowed to oppose the Application and to address the Court on relevant information that needs to be considered before a Court grants the order applied for by the execution creditor.

The Court has a discretion to order that the property be sold with a reserve price or without a reserve price.

A Court will not grant an order that the execution creditor may sell the property at a sale in execution if it is of the opinion that the debtor can satisfy the debt in an alternative manner.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Rates and taxes vs water and electricity

Did you know that there is a difference between rates and taxes charged on property and the utility you pay for water and electricity? Often these phrases are used interchangeably, and it is important for a property owner to know and understand the difference.

Rates and taxes are financial liabilities borne by the owners of immovable property which are paid on a monthly basis for basic services that are provided by the local municipality. These services include maintenance of roads, street lighting, storm drainage, sidewalks, refuse, sewerage, firefighting, etc. in other words, property rates help fund services that will improve the lives of those living in that particular community.

Property rates are based on the market value of the property as determined by a township appointed property valuer. Generally the higher the value of your property, the higher the rates you will pay.

Utilities such as water and electricity however, do not fall under property rates and are charged separately. They are based on the consumption of water and electricity, which data is collected from meter readings which should be conducted at regular intervals.

In terms of the Prescription Act read with various cases on the issue, it is trite (accepted) law in South Africa that rates and taxes charges prescribe after a period of 30 years; whereas water and electricity service charges prescribe after a period of 3 years.

In the Argent Industrial Investments v Ekurhuleni Metropolitan Municipality case, the High Court found that a consumer who receives a utility bill for electricity or water for any period older than 3 years cannot be held liable for payment of the amount once it has prescribed.

In conclusion the municipality has a duty to take reasonable steps to provide the homeowner with an accurate calculation of the utilities that it charges which are generated from meter readings that must be conducted on a regular basis– this duty exists for the benefit of both the consumer and municipality!

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Is a nude prohibition in a will enforceable?


I bequeath my farm to my son on condition that he will never be allowed to sell or encumber the farm.

This burdens the property with a condition that the heir can never sell the property. This bequest amounts to a nude prohibition or nudum praeceptum. It must be noted that such a provision cannot be registered against the property.

We often find provisions in wills that are not enforceable due to the nudum praeceptum principle. In order for the bequest to succeed the Testator should provide for a “gift-over” should the heir not adhere to the condition.

Several authors have commented on the nudum praeceptum principle:

  • Cameron, De Waal and Wunsh1;
  • Pace and van der Westhuizen2;
  • Olivier, Strydom and van den Berg3

All the authors indicate the need for the testator to include a “gift over” provision.

Accordingly, for the bequest as mentioned above to succeed, the Testator would have to include a “gift over” provision:

I bequeath my farm to my son on condition that he will never be allowed to sell or encumber the farm. Should he endeavour to sell or encumber the farm, it will devolve upon my daughter.

This transfer of ownership, should the heir act contrary to the condition imposed, is referred to as a “gift over”. A restriction on an heir who is the owner of a property does not bind the heir unless a gift over provision is included.

Pace and van der Westhuizen4:

“…Should the testator fail to appoint a further beneficiary on the condition being fulfilled, the resolutive condition is considered to be a nudum praeceptum and will be disregarded.”

The rule of nude prohibition is not itself a rule of construction but rather a rule imposed in the interests of the freedom of owners to deal with property as they choose.5 This does not mean that the bequest must be considered invalid but that the heir receives the inheritance free of the condition.

Olivier, Strydom and van den Berg6 succinctly summarises the nudum praeceptum principle:

“A testator who attempts to deprive his fully contractually competent legatee or heir of the right to control, or to dispose of the property bequeathed to him, by placing the property in the hands of an administrator, or by imposing a restriction on alienation, will not normally bind the beneficiary. Such restrictions are regarded as nude and not enforceable.

Such restrictions can be binding if provision is made for a successive beneficiary if the first taker should fail to abide by the imposed restrictions.”

It is clear from the above that all the authors indicate the need for the testator to include a “gift over” provision.

Some Testamentary Trusts created in wills can also be unenforceable if, for instance, the assets are bequeathed to children on condition that, should they be under the age of 25, the assets must be administered in Trust by trustees on their behalf. If there is no provision for a “gift over”, the children may, upon reaching majority, in terms of the nudum praeceptum principle, insist on receiving the inheritance, notwithstanding any other provisions in the will.

We are able to assist and ensure that your Will gives effect to your wishes.

Do not hesitate to contact us for expert advice.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

1 Cameron et al Honoré’s Law of trusts 154;
2  Pace and Van der Westhuizen Wills and trusts A55.
3 Olivier, Strydom and Van den Berg Trust law and practice 2-11.
4 Pace and Van der Westhuizen Wills and trusts A55.
5 Cameron et al Honoré’s Law of trusts 154;
6 Olivier, Strydom and Van den Berg Trust law and practice 2-11.

New owner not responsible for previous owner’s debt

The Application of Section 118(3) of the Municipal Systems Act by the municipalities had the implication that in some cases new owners had their electricity cut off, or have been unable to open a municipal account, because they have been held responsible for debts, sometimes adding up to hundreds of thousands of rands incurred by a previous or multiple previous owners.

Section 118(3) states that “An amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property”. Section 118(3) creates a charge over the property in favour of the municipality.

The days of uncertainty concerning the inheritance of historical debt from previous owners and the worry of municipal services being suspended are over following the Constitutional Court Judgement delivered on 29 August 2017 in Chantelle Jordaan and Others v City of Tshwane Metropolitan Municipality and Others.

In order to avoid unjustified arbitrariness in violation of Section 25(1) of the Bill of Rights which prohibits arbitrary deprivation of property which would happen if debts without historical limit are imposed on a new owner of municipal property, the Court held in an unanimous judgement that section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Can a divorce order be refused?

Many victims of a divorce will tell you that divorce is a traumatic experience and one which, litigants finding themselves in such a position, want to finalize as quick as the initial marriage ceremony passed. A question which regularly surfaces during divorce consultations is whether a divorce order can be refused, either by the court hearing the divorce alternatively by the other spouse?

Section 3 of the Divorce Act 70 of 1979 (hereinafter referred to as “the Act”) provides that a court may grant a divorce order on the ground of irretrievable breakdown of a marriage if it is satisfied that the marriage relationship between the parties to the marriage has reached such a state of disintegration that there is no reasonable prospect of the restoration of a normal marriage relationship between them. Section 4(3) of the Act, however, reads that if it appears to the court that there is a reasonable possibility that the parties may become reconciled by way of marriage counselling, the court may postpone the proceedings in order that the parties may attempt reconciliation.

It is the word “may” in section 3 of the Act which caused uncertainty to whether a divorce order may be refused by a court hearing the divorce. There have been conflicting judgements delivered by our courts in this regard. In the case of Schwartz v Schwartz the court a quo (the court hearing the divorce) refused a divorce order and found that the parties’ marriage has not irretrievably broken down and that the parties should ‘try again’. As one can expect, the husband was not satisfied with the order of the court a quo and the matter was taken on appeal. The Supreme Court of Appeal [Schwartz v Schwartz 1984 (4) SA 467 (AD)] found that a court does not have the discretion to refuse a divorce order, subsequent to finding that a marriage has irretrievably broken down. The Judge argued that if it was the intention of the legislature to impose such a discretion on a court hearing the divorce, the legislature would have made provision for certain circumstances under which a divorce may be refused. The aforesaid principle was confirmed in the Supreme Court of Appeal judgment of Levy v Levy 1991 (2) SA 614 (AD).

There is, however, one exclusion to the general rule set out supra, which is contained in section 5A of the Act. In terms of the aforesaid section a court may refuse a civil divorce if it becomes clear to the court that one party to the divorce may not be able to remarry as a result of their religion which provides that such a marriage must be dissolved in a certain manner. Under these circumstances a court may refuse the civil divorce until the court is satisfied that the person whom has the power to dissolve the religious marriage, has taken all necessary steps to have such a marriage dissolved.

Section 5A of the Act was specifically promulgated to come to the assistance of spouses (mostly the wife) whom are married in terms of Jewish or Muslim religion and in which only the husband can agree to a divorce.

Lastly, the question of whether your spouse can refuse a divorce. The case law in this regard read that if one party refuses to uphold the status quo (being married), it is prima facie proof of the fact that the marriage has irretrievably broken down and consequently a court cannot under such circumstances refuse a divorce order.

For any divorce queries, do not hesitate to contact our offices on (012) 361 5001.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.  Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Increase in VAT: What rate should be charged in property transactions?

In the 2018 Budget Speech delivered by Finance Minister Malusi Gigaba on 21 February 2018, the standard rate of VAT was increased from 14% to 15%, effective from 1 April 2018.

However, tax is never that simple. Even after 1 April 2018, there are circumstances where the applicable VAT rate will still be 14%. The Value-Added Tax Act 89 of 1991 (“VAT Act”) contains certain specific rules with regard to a VAT rate change and the rate of VAT which will apply to goods or services supplied during the transitional period.

General fixed property transactions

The rate of VAT for fixed property transactions is the rate that applies on the date of registration of the transfer of the property in a Deeds Registry or the date that any payment of the purchase price is made to the seller (whichever occurs first).

Residential Property

Section 67A (4) of the VAT Act contains a rate specific rule that provides an exception applicable to residential property. In terms of this rule, liability for VAT will remain at 14% (the VAT rate before the increase) if the following three requirements are met:

  • the deed of sale was concluded before 1 April 2018; and
  • both the payment of the purchase price and the registration of the property will occur on / or after 1 April 2018; and
  • the VAT-inclusive purchase price was determined and stated as such in the deed of sale.

For purposes of this rule, “residential property” will include –

  • an existing dwelling together with the land on which it is erected;
  • any sectional title unit where such unit comprises a dwelling;
  • land bought together with a building package;
  • construction of a new dwelling by any vendor carrying on a construction business.

Commercial Property

There are no rate specific rules in relation to commercial property and therefor if the registration of the transfer of commercial property is effected in the Deeds Registry on/or after 1 April 2018 and payment is made to the Seller on/or after 1 April 2018, VAT at a rate of 15% will apply and be payable by the seller, irrespective of the date of conclusion of the agreement of sale.

We are currently in a transitional phase and the increase in VAT may cause uncertainty and practical difficulties, kindly contact us should you require assistance in this regard.



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.

At the end hereof we will briefly discuss Section 7C of the Act and the effect thereof on loans to companies where:

  • at least 20% of the shares are held by a trust or a beneficiary of a trust; or
  • at least 20% of the voting rights can be exercised by that trust or a beneficiary of that trust. (our emphasis)

1. Budget 2018


In general the 2018 Budget surprised most of us, if only in the sense that we expected an increase in Income Tax rates, as has been the norm in previous years. If this can be seen to indicate a realisation by Government that there is a limit to the amount of tax that can be collected from the so-called “rich”, it has to be welcomed.

1.2 Dividend Withholding Tax

The dividend withholding tax rate was increased by 5 percent to 20 percent in 2017 with effect from the 22nd of February 2017.

There were no subsequent changes to the dividend withholding tax rate.

1.3 Capital Gains Tax

The inclusion rates increased substantially in the 2016 Budget.

The rates remained unchanged for the 2018/2019 tax year.

1.3.1  Individuals/Special Trusts:

      • Inclusion rate:
        • 40%
      • Maximum effective rate:
        • 18%

1.3.2 Trusts:

      • Inclusion rate:
        • 80%
      • Effective rate:
        • 36%

1.3.3 Companies:

      • Inclusion rate:
        • 80%
      • Effective rate:
        • 22.4%

1.3.4 Annual exclusion and exclusion in the year of death:

      • Annual exclusion:
        • R 40 000
      • Exclusion in year of death:
        • R 300 000

1.4 Transfer Duty

No amendments to Transfer Duty rates.

1.5 Estate Duty

The Estate Duty rate was adjusted upwardly by 5% to 25% applicable to estates where the dutiable amount of the estate exceeds R 30 000 000.

The dutiable amount of an estate is determined by deducting the following from the assets and deemed assets in the estate:

      • Administration costs;
      • Liabilities;
      • All deductions allowed in the Estate Duty

The result of the amendment will be as follows:

  • Dutiable amount up to R 30 000 000:  Rate 20%;
  • Dutiable amount over and above R 30 000 000: Rate 20% on the first R 30 000 000 and 25% on the amount above R 30 000 000.

This amendment is according to one of the recommendations of the Davis Tax Committee (DTC) on Estate Duty. Notwithstanding the statement in the 2017 Budget, that the report of the DTC on Estate Duty will receive attention in the 2018 Budget, this is the only amendment which can be traced back to the DTC report on Estate Duty. This does not mean that other recommendations of the DTC will not be implemented at a later stage.

We seriously doubt whether this amendment will have much impact on the amount collected in respect of Estate Duty, as statistics, relied upon by the DTC, reflected that a minute percentage (4%) of estates exceed R 30 000 000.

The introduction of a 5% increase in the rate applicable to these estates will most definitely result in more aggressive tax and estate planning by taxpayers who can afford the best advisors. We will not be surprised to see a decrease in the 4% mentioned above.

1.6 Donations Tax

In order to bring the rate in line with the Estate Duty rate, the Donations Tax rate has been amended as follows:

  • Donations up to R 30 000 000:              Rate 20%;
  • Donations exceeding R 30 000 000:     Rate 25% on the amount above R 30 000 000.

It is hard to imagine why anybody would want to make donations exceeding R 30 000 000.

1.7 VAT

Effective as from the 1st of April 2018 the VAT rate has been increased by 1 percentage point to 15%.

For information on the effect of the increase and how to deal with the transition, we enclose, for your convenience, a link to the SARS website:

1.8 Official rate of interest

The so-called “official rate of interest” is used by SARS to quantify the fringe benefits of low-interest loans provided by employers to employees as well as the amount of a deemed donation in terms of Section 7C of the Act.

At present the rate is calculated by increasing the official repurchase (repo) rate by a 100 basis points (currently 7.75%). The prime rate is, on average, 2.5% above the official rate of interest. It is proposed to increase the “official rate of interest” to a level closer to the prime rate.

This might mean an increase of approximately 2% – 2.5%, which will have an effect on the deemed Donations Tax payable on interest free or low-interest loans in terms of Section 7C of the Act.


Section 7C was amended on the 18th of December 2017 to include a loan, advance or credit that:

(a) a natural person; or

(b) at the instance of that person, a company in relation to which that person is a connected person in terms of paragraph (d)(iv) of the definition of connected person,

 directly or indirectly provides to—

(i) a trust in relation to which—

(aa) that person or company; or

(bb) any person that is a connected person in relation to the person or company referred to in item (aa),

is a connected person; or

(ii) a company, if at least 20 per cent of—

(aa) the equity shares in that company are held, directly or indirectly; or 

(bb) the voting rights in that company can be exercised,

by the trust referred to in subparagraph (i) or by a beneficiary of that trust. (our emphasis)

This amendment was the result of avoidance measures implemented by taxpayers to circumvent the provisions of section 7C by lending money to a company of which a trust held the shares.

Certain further technical amendments were introduced to provide for a loan to a company as envisaged in Section 7C(a)(ii) above. The provisions of this subsection are deemed to have come into operation on the 19th of July 2017.

It is important for clients and their advisors to take cognisance of the new amendments where loans are made to companies as envisaged in the subsection accentuated in red.

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 and experience in the field;
      • Trustworthiness;
      • Ability to stay abreast of new developments affecting your estate

We will keep you up to date on further developments and the effect thereof on your estate plan.

GPJ van den Berg                                                         WC van der Merwe
B Civ Iuris, LLB                                                            BCom LLB, LLM
Head: Estate & Trust Division                                Associate
Delport van den Berg Inc.                                       Delport van den Berg Inc.                                           
T: +27 (12) 361 5001                                                    T: +27 (12) 361 5001