ConCourt ruling clarifies understanding in the Thistle Trust case concerning the conduit principle and redefines tax and estate planning for tiered trusts
In clarifying the application of the conduit principle to capital gains within multi-tiered trust structures, the Constitutional Court emphasised specific provisions of the Act and the Eighth Schedule thereto. The majority opinion determined that the conduit principle does not extend beyond the first beneficiary trust, thus holding the Thistle Trust liable for capital gains tax. Conversely, the dissenting opinion advocated for a rational and non-arbitrary application of tax laws, urging for the full implementation of the conduit principle for ultimate beneficiaries.
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