The introduction of the Special Trust by SARS has brought about more favorable tax treatment for certain trusts. Unlike traditional trusts that are taxed at a flat rate, Special Trusts are taxed on the same sliding scale as natural persons. SARS recognizes two types of Special Trusts for tax purposes: Special Trust Type A: This trust is created solely for the benefit of a person or persons with a mental or physical disability, as defined in Section 6B(1) of the Income Tax Act. The disability makes it impossible for the beneficiary/beneficiaries to earn enough money to care for themselves or manage their finances. If there is more than one qualifying beneficiary, they must be related to each other. These trusts can be created either through a will or during the creator's lifetime, and sometimes as a result of a court order in favor of a specific natural person with a disability to assist in the management of their affairs.
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