Hello all,
In this estate there is a gift of the family company shares to a discretionary trust (residue to spouse).
After the testator’s death, a large dividend was declared - as income of specific gift, this is due to the trust.
There is an intention to appoint this dividend out to the spouse (s 144).
What about the income taxation? Presumably it gets taxed in the hands of the executors, with an R185 (estates) for the trustees. They then report and pay again, with an R185 (trusts) for the spouse? (who then reports again?!)
Am I right? I guess there’s no way to ‘streamline’ this process…?
Many thanks
Does s 144 apply to the dividend?. That section applies to property that was in the person’s estate immediately before death, but the dividend didn’t exist then.
The executors could have escaped liability if the shares had been assented before the div was declared but is it arguable that the admin period ended before then?
Any further shortcutting could lead to the widow paying too little tax (caused by the dividend allowance unless she has other dividend income in excess of it) if she declares the sum received as dividend income or as the dividend element of estate income rather than as trust income. If she declares it as trust income the trustees will need to account for tax at 45%.
Thanks Duncan - good point!