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Where Taxpayers and Advisers Meet

IT in the admin period

Curious Beast
Joined:Tue Jul 30, 2013 3:35 pm
IT in the admin period

Postby Curious Beast » Mon Feb 15, 2016 12:36 pm

Hi all

It's been a while since I studied IHT, so apologies for the probably basic question (and likely poor suggested answer)!

Say a person dies and leaves 2 income generating assets; one specifically willed to their son, the other to be distributed as deemed fit at the time of distribution.

So the assets pass some time after death (say 2 years) as things drag on, the estate takes in the income and holds onto it. The son takes the first asset, then the second is passed to some grandchildren.

The estate is now ready to wind up, so it is about to distribute the cash to the new owners of the respective assets.

Does everything need to be treated as trust income, distributed to beneficiaries? Or is the income generated for asset one deemed to have always been the son's (in which case the estate isn't taxed on it, as it was never the estates income, it was always the son's and the estate was holding it for him)? The grandchildren get an R185 based on the respective income being the estates and then being due to the grandchildren (rather than always having been theirs).

Am I close? I realise each beneficiary will have to declare said income, it's the part before I am wondering about.

Thanks all.

Joined:Wed Aug 06, 2008 3:55 pm

Re: IT in the admin period

Postby LozaACCS » Tue Feb 16, 2016 9:52 am

My understanding is that unless the income on the sons absolute interest is mandated, then the income arising on each legacy is taxed on the PR,s with a further assessment on the beneficiaries who can frank the liability with the tax credit on form R185

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