For an IIP Trust where the income is paid directly to the beneficiaries(aka mandating the income), the Trust does not have to declare it on their SA Tax Return, or indeed have to complete a tax return if there are no chargeable gains (the beneficiaries pay the tax if they need to). However, if the income passes through the Trust bank account, the trust has to declare it and pay tax. The Catch 22 is this - if the capital is invested in shares on an investment platform, they will typically only make income payments into an account in the name of the Trust, not directly to the beneficiaries, forcing the Trust to declare the income and pay the tax.
This must be a common problem for trustees of IIP Trusts, but I can't see any way round it. Has anyone found a way to mandate dividends from an investment platform directly to beneficiaries and hence save paperwork, and in some cases tax?
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IIP Trust Taxation - Catch 22?
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