In a discretionary trust, the trustees need to exercise their discretion and award income and/or capital gains to the beneficiaries before the end of each tax year. This is to comply with the Income Tax Act that requires any such award to vest in the beneficiaries before the 28th February. (Practically, it may be difficult to establish the exact values to be awarded, but the principle of the award can be confirmed).
SARS will want to see that the trustees exercised their discretion timeously. A resolution signed by the trustees before the end of February 2017 will go a long way in fulfilling this obligation.
Are your trustees’ resolutions in place?
Contact our Trust expert, Hannah, for advice on this and other Trust matters.