Copy of MOCK 5: 5 QUESTIONS 45 MINUTES 60% PASS MARK [Available]

Gary loaned his discretionary Family Trust an amount of R11 000 000. The prevailing commercial rate is 10.9% and the SARS official rate was 7%. He made this loan in the year ending 2022. In that year there was no income that was generated from this loan. On 1 March 2023, the trustees purchased a rental producing property. At the end of the year of assessment, the trust had received R1 200 000 in rent and expenses of R120 000. The trustees chose not to make any distributions in the current year of assessment.

The full loan amount remains outstanding.

In relation to the tax consequences of the above transaction if, one has to disregard donations tax,:  select the correct statement 

Timmy died 2 years ago. In his will he bequeathed the primary residence to a testamentary trust with the use of the residence to his wife Pretty, for the rest of her life.

At the time that Timmy died the market value of the property was R6 000 000 which he purchased for an amount of R 2 100 000. Pretty recently died. The market value of the property at the time of her death is R6 200 000.

Assume, for the purpose of this question, that the original bare dominium created, was valued at R200 000. Calculate the value which will be estate dutiable as a result of Pretty’s death.

Select the correct option:

Timmy died 2 years ago. In his will he bequeathed the primary residence to a testamentary trust with the use of the residence to his wife Pretty, for the rest of her life.

At the time that Timmy died the market value of the property was R6 000 000 which he purchased for an amount of R 2 100 000. Pretty recently died. The market value of the property at the time of her death is R6 200 000.

The bare dominium value that was inherited by the testamentary trust was:  Select the correct option

Gary loaned his discretionary Family Trust an amount of R5 000 000. The prevailing commercial rate was and is 10.9% and the SARS official rate was 7%. He made this loan in the year ending 2022.  On 5 March 2022, the trustees purchased a rental producing property. In the 2023 year of assessment,  an amount of R190 000 rental income was received by the trust and retained in the trust. At the end of the current year of assessment, the trust  received R2 000 000 in rent and expenses of R120 000. The trustees chose not to make any distributions in the current year of assessment.

The full loan amount remains outstanding.

In relation to the tax consequences of the above transaction if, one has to disregard donations tax :select the correct statement