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Introduction
When a natural person (taxpayer) dies, that person is called a ‘deceased person’ and all his or her assets on date of death will be placed in an estate. This estate is called an estate of a deceased person (commonly known as a ‘deceased estate’). Assets in a deceased estate can amongst other things include immovable property (house), movable property (car, furniture, etc), cash in the bank, etc. The person who administers a deceased estate is called an ‘Executor’. Once the Executor has finalised all the administration in the deceased estate, the remaining assets (after paying all the debts) will be distributed to the beneficiaries.
A beneficiary can consist of either heirs and/or legatees. A legatee is a person who receives a specific asset from the deceased estate. An heir is a person who receives the balance of the estate (that is, after all disposals to a legatee are finalised).
What is Estate Duty?
Estate Duty is levied on the worldwide property and deemed property of a natural person who is ordinarily resident in South Africa and on South African property of non-residents. Various deductions under section 4 of the Estate Duty Act, 1955 are allowed to determine the net value of the estate. An abatement of R3.5 million is allowed against the net value of the estate to determine the dutiable value of the estate. The Estate Duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.
The determination of Estate Duty can be summarised as follows –
| All Property of the deceased person at date of death |
RXXX |
| Property deemed to be property of the deceased estate at date of death |
XXX |
| Gross value of the deceased estate |
XXX |
| Less: allowable deductions |
(XXX) |
| Net value of the deceased estate |
XXX |
| Less abatement amount |
(3 500 000) |
| Dutiable amount |
XXX |
| Estate Duty calculated on the dutiable amount |
XXX |
| Estate Duty payable by the deceased estate |
(XXX) |
| Estate Duty payable by beneficiary (if applicable) |
(XXX) |
All income received or accrued before the deceased’s death is taxable in the hands of the deceased person up until date of death, and will be administered by the executor or administrator acting as the deceased’s representative taxpayer. After the date of death, the deceased estate comes into existence. The assets of the deceased person will be held by the deceased estate until the liquidation and distribution account has lain for inspection and become final under section 35(12) of the Administration of Estates Act, after which the assets will be either handed over to the heirs or delivered to the trustee of a trust estate.
Income, which accrues to the estate after the death of the deceased but before the distribution of the assets to the beneficiaries, is dealt with under section 25 of the Income Tax Act.
Who is liable for Estate Duty?
It is normally the responsibility of the Executor to pay the duty as levied on the property of the deceased. However, there are instances in which the estate duty is payable directly by the person who is receiving the property. For example, where a policy is payable directly to a beneficiary, the Estate Duty attributable to such policy is payable by the beneficiary (in other words, this portion of the Estate Duty will not be paid by the deceased estate).
When is Estate Duty due?
Estate Duty is due within 1 year of date of death or 30 days from date of assessment, if assessment is issued within 1 year of date of death. Currently, interest is levied at 6% p.a. on late payments.
Who is responsible for collecting Estate Duty?
SARS is responsible for collecting the Estate Duty.
How do I report or register a deceased estate to SARS?
Even if Estate Duty is not payable you have to inform SARS that the person is deceased.
There are two options at this stage to report a new Estate Case to SARS:
In order to report a new Estate Case to SARS, it is important that the correct Supporting Documentation be submitted to SARS. Refer to our FAQ on what is required to report the new Estate to SARS.
Also see our FAQ on Deceased Estates for more information on how to register a Deceased Estate.
How do I declare Estate Duty?
The executor will calculate the Estate Duty payable when preparing the liquidation and distribution account. The executor must complete the Estate Duty Return (Rev267) and must submit the return, together with the liquidation and distribution account to the Master of the High Court as well as to SARS.
Supporting documents required for the request for SOA Prior 2008 for Estates / STC?
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Type of Deceased Estate
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Before coding, one of the supporting documents listed required to code case
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After coding, request if outstanding
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Deceased Estate –
Section 13 and 14 of
the Administration of
Estates Act No 66 of
1965
|
· J190 form (Acceptance of Trust as executor) received from Office of the Master of High Court;
· Notifications received via fax, post, e-mails or any form of written communication addressed to SARS;
· Information received through clients visiting SARS;
· Information received from other SARS business areas or;
· Information obtained from the DHA link; or the Master’s website by using the following link:
https://icmsweb.justice.gov.za/mastersinformation
|
· Acceptance of Executorship (form J190);
· Letter of executorship (form J238 issued by the Master of the High Court);
· All returns up to date of death;
· Copy of Death Notice of deceased (form J294) issued by the Master’s Office or death certificate;
o If neither is obtainable, obtain proof of the date of death via the Master’s Office public access website at https://icmsweb.justice.gov.za/mastersinformation or IBR’s Person Search. In case of the agent, a Power of Attorney from the person appointed;
· Master’s reference number indicates an insolvency or liquidation;
· Name, address and contact details of the representative taxpayer or his/her agent
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Deceased Estate –
Section 18(3) of the
Administration of
Estates Act No 66 of
1965
|
· J155/J170 form received from the Office of the Master of the High Court;
· Notifications received via fax, post, e-mails or any form of written communication addressed to SARS;
· Information received through clients visiting SARS;
· Information received from other SARS business areas or
· Information obtained from the DHA link; or Master’s website by using the following link:
https://icmsweb.justice.gov.za/mastersinformation
|
· Certificate of appointment from the Master of High Court;
· Letter of executorship (form J238 issued by the Master of the High Court);
· All returns up to date of death;
· Copy of form J294 Death Notice issued by the Master’s Office or death certificate.
Note that if neither is obtainable, a copy of the inventory;
· Copy of the Will, if the deceased had a valid Will.
o A Will provides information whereby e.g. a Trust needs to be registered and a copy of the Will together with a copy of the Liquidation and Distribution Account is sent to the Portfolio Maintenance team of active (“live”) cases in order to register the Trust.
· If there is no valid Will, there must be a clear indication that this is an intestate estate;
· In case of the agent, a Power of Attorney from the person appointed, such as the attorney or auditor;
· Master’s reference number;
· Name, address and contact details of the representative taxpayer or his/her agent;
· Names and addresses of beneficiaries.
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Double taxation on estate duty
Double taxation may arise if the same assets of the deceased person are subject to Estate Duty in South Africa as well as the equivalent thereof in the foreign country. South Africa has entered into Estate Duty agreements, to avoid double taxation on Estate Duty, with the following countries: The United States of America, the United Kingdom, Zimbabwe and the BLS Countries (Botswana, Lesotho, Swaziland). For more information, click here. Where double taxation on Estate Duty arise and no Estate Duty agreement exists between South Africa and the foreign country, relief for the double taxation must be sought under domestic rules.
Estate Duty queries may be directed to: SARS Call Centre at 0800 00 7277 or via e-mail to estateduty@sars.gov.za.
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