CAP REVISED QUIZ: TRUST 1- 15 QUESTIONS 60 MINUTES [VERY ADVANCED -DO NOT STRESS]

Tammy set up a discretionary family trust 5 years ago. Tammy’s aunt donated R1 000 000 to the trust. The trust deed provides for trustees to decide in whom they want to vest income and or assets of the trust. A clause does however give rights to the founder, Tammy, to revoke the right of any beneficiary to the income or assets of the trust when so awarded to them. In this current year of assessment, the trustees decide to distribute income that the trust received as a result of the donation made by Tammy’s aunt. The trust received R150 000. All beneficiaries of the Trust are Tammy’s children. Distribution is made as follows: To Gemma who is 15 years, an amount of R40 000 To John who is 10 years, an amount of R45 000 To Samantha who is 18 years, an amount of R50 000 Tammy exercises her right and revokes the decision to grant John R45 000 and confers this right to Gemma and Samantha who now receive an additional R22 500 each. The taxable income of the various role players are: Select the correct statement.

Match the statements below:

Complete the statement below:

The joint-action rule implies that, [if not| if] otherwise provided in the trust deed, co-trustees of a trust must [not act jointly| act jointly] if they act on behalf of the trust and wish to bind the trust. 

In relation to beneficiary rights, match the statements below:

Match the statements below:

The definition of a ‘trust’ in tax law means:

In relation to a Inter Vivos Trust  – Match the statements below:

our grandmother Nannie instructed in her Will for a trust to be formed on her death. The beneficiaries of the trust were a class of beneficiaries which included you.

The trustees of the trust made a call to you in May of this year advising you that they had awarded you an amount of R100 000. This income was as  result of an investment made which paid interest and dividend on the last year of assessment. The trustees chose to distribute this income in this year of assessment. The R100 000 is made up of 60% interest and 40% dividend,

In your final tax assessment submission you have to disclose the amount received. Indicate whether the conduit principle will or will not apply to these amounts.

Gary is the founder of a discretionary trust set up for the purpose of caring for his family. The beneficiaries of the trust are Gary, his wife Karen, their two minor children and Gary’s cousin who is disabled. Gary’s brother Paul, donates R50 000 to the trust on an annual basis. The trustees have, in this current year of assessment, not made any distributions to the trust beneficiaries.

This will be considered a [normal trust| special trust A| special tryst B]] for the purpose of the Income Tax Act and [will not| will] be taxed according to a natural person tax tables.

Complete this statement by selecting the correct options below.

Tom bequeathed all the assets in his estate to a testamentary trust for the benefit of his 4 adult children. Tom’s spouse did not feature in the Will nor as a beneficiary of the testamentary trust. The children repudiated their inheritance and as a result the testamentary trust failed. Select the correct option.

Are trusts automatically a provisional tax payer? Select the most accurate statement