Estate Taxes to be Paid

A) WHAT IS ESTATE DUTY AND WHO PAYS IT?

Estate Duty is an inheritance tax (also known as Estate Tax or Death Duty).

It is a Tax that arises on the death of an individual and the Estate is taxed, based on the Nett value thereof.

• • RATES

• • • Persons deceased on or after 1 March 2018:

• • • • 20% on the first R30M of the dutiable Estate;

• • • • 25% on the dutiable Estate over R30M.

• • EXEMPTIONS/EXCEPTIONS

• • • The first R3,5M;

• • • Any bequest to a surviving spouse;

• • • Any bequest to a Public Benefit Organisation;

• • • Since 1 January 2010, the unused portion of the exemption of the first dying spouse can be carried forward to the Estate of the last dying spouse;

• • • Currently the maximum exemption/exception would be R7M.

B) WHAT OTHER TAXES WILL BE PAYABLE?

• • All pre-death Taxes, as well as any arrear tax debt, will have to be paid by the Executor.

• • It is assumed that you have DISPOSED OF ALL YOUR ASSETS one minute before you pass away, and this can result in Capital Gains Tax being paid as well.

• • If you were a business owner and VAT registered, VAT will be payable as well on the deemed value of the assets.

• • The Executor must also register the Estate as a Taxpayer and all income and capital gains / losses will be accounted for in the Estate on the post-death transactions.

• • The Estate cannot be finalised until all the Tax Returns (pre- and post-death) have been filed and all Taxes have been paid.

• • SARS has access to the L&D account and can object if they believe that all the Taxes have not been properly provided for.

• • The Executor will also collect any amounts due to you by SARS, after death.

C) WILL THE ESTATE BE TAXED IF I DECIDE TO DISTRIBUTE MY ASSETS THROUGH DONATIONS?

• • A natural person is allowed to donate up to R100 000-00 per Tax Year, tax free, to any person who is not a Non-Profit Organisation (NPO).

• • Any amount exceeding the aforementioned R100 000-00, will be taxed at 20% and is payable by the donor.

• • Donations can effectively be used as a tool to reduce your Estate if proper Estate Planning is done.

• • Any amount donated, pre- or post-death to an NPO, will be exempt from Donations Tax.

• • Effective from 1 March 2018, any donations made more than R30M per Tax Year, will be subject to Donations Tax of 25%.