A Fin24 user who is unable to work wants to know if she is liable for tax on money sent by her sons abroad for her living expenses. She writes:
All three of my sons live abroad on different continents. My husband passed away over 16 years ago and my sons held foreign citizenship at the time; two were already living abroad. All his assets in South Africa were left in a testamentary trust in favour of the family. It was not a large trust and really comprised only a house and contents which I have a life right to, whereafter the proceeds would be theirs. The current market value of the house is probably about R1 000 000.
One of the conditions of my husband's will was that my sons should keep me in the manner to which I was accustomed, which they each honour through sending me varying amounts of money which amounts to about R22 000 per month. In all cases, the monies sent are based on their taxed earnings in their chosen new countries.
Should I be paying tax on this, since I am unable to work due to a number of medical conditions?
READ: Is financial help from kids taxable?
What would the implications be were my sons to build onto the property, since one of them has elected to pay it forward by paying for the education of my carer/domestic worker's two children? This son is a lawyer in a very large international firm dealing with oil investments. I am accommodating three extra people at no cost to them, and in fact pay the mother a salary every month.
Tony Davey of Tony Davey & Associates responds:
In order to be subject to tax, any income must (subject to specific exceptions such as investment income) be received in the context of trade, business or salary for services rendered. In this matter the receipts are a series of successive donations from family members in a domestic context, and thus will not constitute income subject to tax.
Any benefit from an improvement to domestic property would be similarly treated as a gift (donation) with no tax consequence to the recipient mother.
Disclaimer:
Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
All three of my sons live abroad on different continents. My husband passed away over 16 years ago and my sons held foreign citizenship at the time; two were already living abroad. All his assets in South Africa were left in a testamentary trust in favour of the family. It was not a large trust and really comprised only a house and contents which I have a life right to, whereafter the proceeds would be theirs. The current market value of the house is probably about R1 000 000.
One of the conditions of my husband's will was that my sons should keep me in the manner to which I was accustomed, which they each honour through sending me varying amounts of money which amounts to about R22 000 per month. In all cases, the monies sent are based on their taxed earnings in their chosen new countries.
Should I be paying tax on this, since I am unable to work due to a number of medical conditions?
READ: Is financial help from kids taxable?
What would the implications be were my sons to build onto the property, since one of them has elected to pay it forward by paying for the education of my carer/domestic worker's two children? This son is a lawyer in a very large international firm dealing with oil investments. I am accommodating three extra people at no cost to them, and in fact pay the mother a salary every month.
Tony Davey of Tony Davey & Associates responds:
In order to be subject to tax, any income must (subject to specific exceptions such as investment income) be received in the context of trade, business or salary for services rendered. In this matter the receipts are a series of successive donations from family members in a domestic context, and thus will not constitute income subject to tax.
Any benefit from an improvement to domestic property would be similarly treated as a gift (donation) with no tax consequence to the recipient mother.
Disclaimer:
Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.