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19/03/2012

: TRANSFER OF A PRIMARY RESIDENCE FROM A COMPANY, CLOSE CORPORATION OR TRUST

I. Background
The distribution of assets (including a domestic residence) by a company in a
liquidation, wind-up or deregistration to a natural person generally constitutes a
disposal for capital gains tax (CGT) purposes at both the company and
shareholder levels. The distribution also constitutes a dividend for secondary tax
on companies (STC) purposes, and the acquisition of the residence triggers
transfer duty for the natural person.
II. Reasons for change
Prior to 2001, many natural persons historically utilised companies or trusts to
purchase their domestic residence. This form of holding avoided the imposition of
transfer duty without adverse tax consequences. CGT was introduced in 2001,
thereby creating a potential dual level charge. The residential property company
anti-avoidance rules (introduced in 2002) also eliminated the transfer duty
benefits of the company/trust holding structure. STC-free treatment for capital
profits was additionally limited to pre-2001 capital profits. In view of these
changes, a limited window period was granted to provide the opportunity to
transfer a residence out of a pre-existing company/trust structure. This window
period eliminated all CGT, STC and transfer duty adverse consequences. This
window period has long since expired. Upon review, it has been determined that
many taxpayers should have availed themselves of this window period relief but
have failed to do so.

III. Proposal
Tax relief granted under the previous window period of opportunity will be
restored for another window period. However, under the renewed relief, the
distribution will operate as a roll-over so that all gains or losses will be deferred.
The new roll-over rule replaces the previously granted market value step-up.
Companies or trusts will qualify for relief under these provisions on similar terms
as granted under the previous window period. Like the old regime, the distribution
of a primary residence by a company or trust will be exempt from Transfer Duty
and STC. However, to the extent the Dividends Tax falls within the renewed
window period, the distribution will be exempt from the Dividends Tax.

IV. Effective Date
This provision will operate for a window period of opportunity of approximately two years ending on or before 31 December 2012.

19/03/2012

“WITHOUT PREJUDICE”
BY ATTORNEY SUE VAN ASWEGEN

FOR BETTER OR FOR WORSE

This month we continue the article on Divorce proceedings.

* Once the divorce summons is issued by the Court, the summons will be served by the Sherriff of the Court on the Defendant.
* The Defendant has to decide if he or she agrees and does not want to oppose the divorce. If he or she does not accept the summons, he or she must consult an attorney to oppose it.
* If the summons is opposed, the defendant’s attorney will deliver an answer to the summons (called a plea). The plea must set out all the reasons why he or she does not agree and what he or she wants to claim from the other party.
* Settlement discussions will now take place. This may mean that the parties and their attorneys meet or correspond with one another to try to reach an agreement.
* If a settlement is reached the matter is not opposed any more, and a settlement agreement is signed.
* Whether the case is settled or not, a court date will now be set.
* The case is heard by the court, and a decree of divorce issued.

INTERIM RELIEF RULE 43 APPLICATIONS

Even if the divorce is not finalised yet, you can approach the court for decisions on issues such as:
* Access to or control or custody of children.
* Maintenance for yourself or your children, and
* Your spouse’s contribution for your legal costs, if you have no or a lesser income.
Several factors will be considered, and your attorney will be able to explain your chances of success to you.

THE DAY IN COURT.

Unless the case is opposed, only the plaintiff will appear in court. The procedure runs as follows:
* You are called to the witness box and sworn in.
* Your identity document and marriage certificate will be shown to you to identify.
* If you have reached a written agreement, this will be shown to you to identify the signatures.
* You will have to explain the reasons for the breakdown of your marriage in your own words.
* If you applied for the custody of your children, you may be asked how you will provide for them while you are at work.
* If satisfied the court will grant the divorce order.

GENERAL ADVICE

* Be totally honest with your attorney. Don’t try to “hide” assets or be anything but completely open – your attorney can only act in your best interest if he or she knows all the facts.
* There is no winner in a divorce action. Your attorney will help you to reach an informed settlement agreement.
* The longer you and your estranged partner take to reach a settlement, the poorer you and your children get.
* Don’t let emotions and personal clashes get in the way of issues such as custody and access, maintenance and the division of property.
* The best interest of children is very important to the courts. You may have made a lot of mistakes in your marriage leading to its failure, but keep your personal issues separate and put the welfare of your children first during the divorce proceedings.

“Giving up does not always mean you are weak….. Sometimes it means that you are strong enough to let go”

Until next month
SUE VAN ASWEGEN

19/03/2012

“WITHOUT PREJUDICE”
BY ATTORNEY SUE VAN ASWEGEN

FOR BETTER OR FOR WORSE
“Do you take this man/woman to love and to hold in sickness and health, for richer and for poorer till death do you part.” “Till divorce do you part” seems to be a more appropriate marriage oath these days.
Getting divorced can be an expensive exercise especially if a divorce is defended.
A Divorce can be defended or undefended.
A Defended divorce means that one partner wants a divorce and brings the case to court but the other partner does not want the divorce or does not agree on the division of the estate, maintenance and custody.
An undefended divorce means the other partner agrees to the divorce and the Settlement proposal by the divorcing Partner. An undefended divorce is the cheapest, and the quickest way to get a divorce is to use the Family court.
Using the Family Court.
The Divorce Court, which is part of the Family Court Centre is supposed to make it easy and less expensive to get a divorce.
Divorce cases are heard at the nearest Magistrates Office (Cape Town) by an appointed Family Magistrate.
A Person using the Family Court can choose whether to use an Attorney/Advocate or not, contrary to Divorce proceedings in the High Court. If the Divorce is defended consultations with an Attorney is advisable.
I want a divorce, where do I start and what are my rights?
Consult an Attorney to get Legal Advice regarding your rights;
In terms of:
1. Your Legal Marital Status. Your marital stating is crucial in assessing the division of assets.
1.1.1 in community of Property
1.1.2 Out of Community of Property with accrual
1.1.3 Out of Community of Property without accrual
1.1.4 Marriages out of Community of Property concluded prior to 1 November 1984.

1.2 Custody of, and Maintenance for Minor children born from the marriage if applicable.
1.3 Maintenance for spouse.
1.4 Entitlement to ashore of a members Interest in a Pension fund.
1.5 Debts incurred and future debts incurred by spouse.

2. Once you have established your rights and obligations you can elect to use an Attorney to proceed with issuing the summons, or you can visit the Family Court where an assistant will assist you in completing the necessary documents.

Do not be trapped in an abusive and unfaithful marriage. Choose today, choose you!
To be continued next month.

On a less serious note for those of you who are happily married.

“Cash or Credit Card Madam?” The shop attendant asked the woman who purchased six pairs of shoes. As she fumbled for her wallet the shop attendant noticed a TV remote control in her handbag. “So, do you always carry your TV remote?” the shop attendant asked. “No,” she replied “but my husband refused to come shopping with me, and I figured this was the most evil thing I could do to him legally”

19/03/2012

LIVING TOGETHER? YOU NEED A COHABITATION AGREEMENT
BY ATTORNEY SUSAN VAN ASWEGEN

Cohabitation refers to a stable, monogamous and intimate relationship between two partners who choose to live together.

If affords them a certain degree of stability and permanence, but is less formal than Marriage, and needs no legal interference to come into existence or to come to an end.

Cohabitation is perfectly legal in South Africa, but couples don’t receive any noteworthy legal protection or recognition unless they arrange for it by way of a contract between themselves.

MARRIAGE VERSUS COHABITATION

• The major difference is the absence of structured legal protection for the partners when the relationship ends.
• It may be difficult or even impossible to prove a duty to support and claim maintenance after separation or death if the couple was not married.
• The children of partners who cohabitate are seen as extra – marital in the eyes of the law. Only the birth mother has parental authority, but the natural further must still pay maintenance.
• Partners who cohabitate keep their separate estates, unless agreed otherwise by contract.
• Unmarried partners can end their relationship by agreement or unilaterally. No court order is required.
• Partners who live together can inherit from each other only through a will.

DRAWING UP A CONTRACT
Since no legal consequences follow automatically from a cohabitation relationship, it is up to the partners in the relationship to enter into a contract.

An Attorney can help you to draw up a valid and binding agreement that protects the interests of both partners. The Attorney’s fee will be money well spent, especially if you consider the possible consequences of not having proper protection.

The contract should at least cover the following:

• Household expenses: What are the anticipated expenses and who is responsible for what? From whose account are expenses to be paid?
• Joint Property: Provision can be made for joint assets, as opposed to each party’s’ separate assets. Stipulate who may sell such property or incur debt on behalf of the joint estate.
• Joint home: It is best to register a home (or a lease) jointly in both names or in a partnership or trust to protect both partners. The partners need not have equal shares in the property, and the respective shares can be stated in the title deed.
• Insurance: A partner may agree to take out a policy on his or her life and cede it to the other. A co-owner may insure property, but if the property (such as a car) belongs only to one person, that person must insure it.
• End of relationship: Partners can make provision for the fair distribution of assets, the division of pension interests and possibly the payment of maintenance when they separate. It is important to agree on maintenance in the case of a long-term relationship, particularly when one partner gives up work to raise children or to administer the household.
• Any provision in the contract that deals with inheritance will be invalid; this must be addressed in a will. An attorney should draw up wills for both.

Conclusion

“Never assume the obvious is true. Rather the pain of discipline, than the pain of Regret”

Protect yourself and your assets with a written contract.

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