PART A

Bob Mofokeng $(55$ years old$)$ created the Mofokeng Family Trust on $15$ May $2020,$ an inter vivos

trust to benefit his three children:

Name Age Resident

Nelisiwe Mofokeng

$($unmarried$)16$ South Africa

Sara Dladla $($married out of

community of property$)32$ South Africa

Josh Mofokeng $($unmarried$)25$ England, UK

$1)$ During the current year of assessment, the trust owns the following assets:

$-$ A property complex donated to the trust by Bob Mofokeng at its market value of

R$2200000,$ on the date of establishment.

$-$ Interest$-$bearing bonds issued by a local bank. These bonds were inherited by the trust

from Bob$$s late mother. The market value on the date of her death was R$1000000.$

$2)$ The following income accrued to the trust during the $2024$ year of assessment:

R

Net rental income $192000$

Local interest on bonds $128000$

$320000$

$3)$ The annual distributions approved by the trustee of the trust amounted to the following:

$$ Sara received an amount of R$80000,$ paid pro rata out of all trust income.

$$ Josh received an amount of R$80000,$ paid pro rata out of all trust income.

$$ Nelisiwe received a R$2375$ monthly annuity, paid pro rata out of all trust income.

The balance of the income was retained in the trust.

$4)$ The trust deed stipulates that any retained rental income vests in equal shares in beneficiaries

alive at the end of each year of assessment and will be paid out to the beneficiaries in $2035.$

Should a beneficiary pass away before $2035,$ the rental income not yet distributed will be paid

to the estate of the deceased person.

Required:

Q$\mathrm{.}3\mathrm{.}1$ Calculate the Mofokeng Family Trust$$s tax liability for the year ended $29$ February

$2024.$

$(10)$

Q$\mathrm{.}3\mathrm{.}2$ Calculate the taxable income of Bob Mofokeng for the $2024$ year of assessment.

Assume that the taxpayers do not earn any other income apart from that

provided above.

Show all inclusions and exclusions separately with reasons.

$(5)$

PART B

Bob Mofokeng has approached you due to his recent diagnosis of a neurological disorder. He is

currently updating his last will and testament and intends to distribute all his assets and related

income generated, equally among his children in the event of his death.

He has heard about the potential tax benefits associated with a special trust and is interested

establishing such a trust in his last will and testament.

Required:

Q$\mathrm{.}3\mathrm{.}3$ Advise Bob on whether he may establish a special trust in terms of his will. $(3)$

Q$\mathrm{.}3\mathrm{.}4$ Discuss any possible tax advantages of a special trust compared to an ordinary

trust.

$($