Interest Free Loans

[kissingmybbgoodbye]

Any tax experts here ?

The following scenario

Trust A has assets of xxxx

Beneficiaries want buy property and need xxxx, instead of the trust giving the amount of xxxx (the trust can give capital to beneficiaries) can they give an interest free loan for the amount of xxxx required, e.g the the trust still has assets of xxxx (the loan to the beneficiary), but beneficiary pays back without interest ?

Will this raise questions from sars, or is this completely legal in our tax laws ?

 

[Napalm2880]

You should write up a written agreement stating that the loan 'is not at arms length' and therefore falls outside of NCA, Act 35/2005. Also avoid mentioning a term of the loan if you can. Also consider what happens if you die and suretyship etc.

 

[kissingmybbgoodbye]

You should write up a written agreement stating that the loan 'is not at arms length' and therefore falls outside of NCA, Act 35/2005. Also avoid mentioning a term of the loan if you can. Also consider what happens if you die and suretyship etc.

Thanks Napalm2880, I'll do some further research based on your info, gave some pointers there