Page 43 - Trusts & International tax class slides
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TRUSTS
Tax implications of donations and anti-avoidance measures
• Section 7(3) applies to income on an asset donated by a
parent to his/her minor child (younger than 18 years).
The child does not have contractual legal capacity until
the child becomes a major. The parent as custodian has
to assist the child when legal matters are at stake. For
all practical purposes the parent is still in control of the
asset.
• Another example will be when a donation is made
subject to a condition (section 7(5)). Until the con-
dition is met the beneficiary only has a spes (hope) to
receive a benefit, thus it makes sense that the income
on such an asset has to be attributable to someone (the
donor), as the donor did not make a bona fide
donation.
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