Kabelo Nkosi (72 years old) established the Nkosi Family Trust in South Africa in 2019 for the benefit of his three unmarried children, Sipho, Brigitte and Damian. The children are all South African tax residents. On 28 February 2022, Sipho was 26 years old. He lives and works in Durban. Brigitte was 22 years old and a full-time student at Varsity College. Damian was a 15-year-old scholar. The assets of the trust were all donated by Kabelo.

The trustees are independent third parties and the provisions of the trust deed include the following:

1. Each child will be paid R4 000 per month for their maintenance. SARS does not provide

exemptions in terms of section 10(1)(h) Interest of non-residents and 10(1)(k) Dividends in respect of any portion of an annuity.

2. R24 000 a year will be paid to the Society for the Prevention of Cruelty to Animals (SPCA), a

registered public benefit organisation, and the trust will retain the relevant section 18A certificates to be issued in its name.

3. The balance of the receipts and accruals may be dealt with at the discretion of the trustees. When Damian turns 25, the trust will be dissolved and the balance in the trust will be paid out in equal shares to the three children.

The receipts, accruals and distributions for the current year of assessment ending 28^th February 2022 were as follows:

Receipts and accruals R

Local dividends on shares from SA companies 120 000

Local interest 120 000

Rental income 60 000

=300 000

Distributions

Distributions to the children in terms of point 1 above R48 000 per child and a lumpsum of R44 000 each to Sipho and Brigitte.

Summary of distributions Total Dividends Interest Rental income

R R R R

Sipho annuity 48 000 19 200 19 200 9 600

Brigitte annuity 48 000 19 200 19 200 9 600

Damian annuity 48 000 19 200 19 200 9 600

SPCA annuity 24 000 9 600 9 600 4 800

Sipho lumpsum distribution 44 000 17 600 17 600 8 800

Brigitte lumpsum 44 000 17 600 17 600 8 800

distribution

Retained in the trust 44 000 17 600 17 600 8 800

= 300 000 = 120 000 =120 000 = 60 000

QUESTIONS:

1.1) Calculate the taxable income of Kabelo Nkosi, Sipho and Damian for the tax year of assessment ending 28 February 2022.

1.2)Calculate the normal tax payable by the trust for the tax year of assessment ending 28 February 2022, if it is assumed Kabelo Nkosi died on 28 February 2021.