Abstract:
An estimated 81 142 South Africans emigrated to the United States of America in 2010
(The World Bank, 2010). If only one of these emigrants were a creator, donor or
beneficiary of a South African trust, then it is important to determine the tax implications
both in South Africa and the United States of America for the creator, donor or beneficiary.
In South Africa, the income and gains of the South African trust will be taxed in the hands
of the donor, beneficiary or the trust itself. But, in the United States of America, the tax
consequences could get rather complicated.
The main purpose of this study was to make a theoretical comparison of the tax
consequences of South African trusts both in South Africa and the United States of
America and determine the effect of the emigration of the South African donor and/or
beneficiaries to the United States of America.
Based on the literature reviewed, the donor will be taxed in South Africa if a donation,
settlement or other disposition was made, the beneficiary will be taxed if he/she has a
vested right to income and no donation, settlement or other disposition was made and the
South African trust will be taxed on any taxable income retained in the trust that is not
taxable in the hands of the donor or beneficiary. In the United States of America, the
South African trust will be liable for tax depending on its status as a business, investment
or ordinary trust and furthermore on its status as a grantor or non-grantor trust.
