The Finance Act, 2021, published on 30th June, 2021, has introduced tax exemptions for registered family trusts by making amendments to various tax laws including the Income Tax Act and the Stamp Duty Act.
The Income Tax Act now incorporates several exemptions that apply to registered family trusts. For instance, property that is transferred or sold for the purpose of transferring title or transferring the proceeds of such sale into a registered family trust is now exempted from income tax. Further, the income or principal sum of a registered family trust and any capital gains relating to the transfer of title of immovable property to a registered family trust, is also exempted from income tax.
Additionally, the Stamp Duty Act now exempts a conveyance or transfer, or an agreement for a conveyance or transfer, in favour of a registered family trust from payment of stamp duty. A registered family trust is further exempted from stamp duty as is the case for a will, codicil or other testamentary disposition.
These benefits serve as an attempt to encourage more people to plan their personal estates using registered family trusts in order to enjoy the tax incentives provided by the law.