28 October 2022

This ruling deals with the tax consequences relating to the cession of the applicant’s loan account to a special trust.

The applicant in this ruling is incapacitated. The co-applicant is a special trust that formerly served as a family trust for the benefit of the applicant, his spouse, and children.

It was ruled that the cession of the applicant’s loan account to the co-applicant will not constitute a donation in terms of section 54. The proceeds in respect of the cession of the loan account by the applicant will be equal to the face value of the loan account under paragraph 38. Consequently, no capital gain or loss will be realized.

This binding private ruling is valid for a period of three years from 29 August 2022.

You can read the ruling here.

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