With effect 1 March 2017 loans made to a trust by

• a natural person, or
• at the instance of that person, a company in relation to which that person is a connected person, and where that person or company is a connected person in relation to the trust

With effect 19 July 2017 loans by a natural person or a company to a company is also subject to donation tax on the same basis if 20% or more of the shares of the company is held directly or indirectly by a trust (or beneficiary of trust or spouse of beneficiary).

The following will be specifically excluded from the above donation provisions:special trusts that are created solely for the benefit of disabled persons

• trusts that fall under public benefit organisations
• vesting trusts (in respect of which the vesting rights and contributions of the beneficiaries are clearly established)
• loans used by the trusts to fund the acquisition of a primary residence
• loans that are subject to transfer pricing provisions
• loans provided to the trust in terms of a sharia-compliant financing arrangement, or
• loans that are subject to dividends tax
• loans to employee share purchase trusts

The lender may utilise the annual donations tax exemption of R100 000 (or remaining portion if applicable) against this deemed donation.

No deduction, loss, allowance or capital loss may be claimed in respect of the reduction, waiver or other disposal of such a loan, advance or credit by the lender and will thus have no tax benefit for the lender.