© Warona Lekoko, 2024
Value of “property” XX
Value of “deemed property” XX
GROSS ESTATE XXX
Less: Allowable deductions (XX)
NET ESTATE XXX
Less: Abatement/Rebate (R3 500 000)
DUTIABLE/TAXABLE AMOUNT XXX
ESTATE DUTY @ 20% XXX
Separate tax on transfer of wealth → Estate Duty Act no. 45 of 1955
Payable on net value of assets > R3,5 million
Liability of the deceased estate
Executor of a deceased estate is responsible for calculation & payment of
estate duty
World-wide assets: Ordinarily resident DECEASED ESTATE ADMINISTRATION PROCESS
Non-residents: SA assets
1. Interviews
If dutiable amount does not exceed R30 million → tax levied at 20%
2. Report estate
If dutiable amount exceeds R30 million → tax levied at 25%
3. Open files
4. Letters to creditors & debtors/advertisements
PROPERTY
5. Valuations
If ordinarily resident in SA = worldwide assets
If non-ordinarily resident = only SA assets 6. Income tax return
Owned at date of death 7. Estate bank account
1. Actual property owned by the deceased at the date of their death 8. Pay debts
(movable/ immovable, tangible/ intangible) + any right in or to such
property. Income earned by the deceased prior to death. 9. Prepare “Liquidation and Distribution Account”
2. Fiduciary interests owned by the deceased at date of death (limited 10. Pay Master’s fees + executor’s fees
interests)
11. Pay inheritances
3. Usufructuary interest held by the deceased at date of death
• usufruct 12. File estate as complete – finalisation
• bare dominium
4. Right to an annuity charged upon property held by the deceased
immediately prior their death
5. Any other right to an annuity enjoyed deceased immediately prior to their
death if it accrues to another person on their death
6. Contributions made by the deceased to a pension/provident or retirement
annuity fund, not allowed as a deduction/ exemption
, © Warona Lekoko, 2024
DEEMED PROPERTY
Property is NOT owned at date of death
Certain property items that didn’t exist at date of death but originated due to the death of deceased
i. DOMESTIC LIFE INSURANCE POLICIES
Proceeds from domestic insurance policy on the deceased’s life
Taken out on the life of the deceased
Pays to their beneficiary
‘Domestic policy’ = policy that pays out in SA upon the insured’s death
Policy proceeds can be reduced by amount of premiums paid by beneficiaries plus interest at 6%
If deceased was married in community of property, premiums paid would’ve paid out of joint estate
If surviving spouse is beneficiary, 50% of the premiums paid deemed to have been paid by surviving spouse
50% premiums paid + interest of 6% can be deducted from proceeds
EXCEPTIONS:
1. Proceeds payable to a surviving spouse/child of deceased under a duly registered antenuptial/postnuptial contract,
2. If proceeds are payable to a person who at date of deceased’s death was:
q Partner of deceased
q Co-shareholder in a company which deceased held shares
q Co-member of a close corporation with deceased…
provided that:
• deceased paid no premium and
• policy was taken out for the purpose of enabling that person to acquire the deceased’s share in the partnership, company or close
corporation
3. Except for above exemptions, where Commissioner is satisfied that:
♦ policy isn’t taken out by/at instruction of deceased
♦ no premiums were paid/borne by deceased
♦ no amount i.t.o. the policy is payable to deceased’s estate
♦ no amount is payable to/used for benefit of any relative/dependant or any family company of deceased
ii. DONATIO MORTIS CAUSA iii. ACCRUAL CLAIMS AGAINST SURVIVING SPOUSES
A donation in contemplation of death – donation made when Out of community, under accrual system:
donor anticipates death & donates specific asset - At beginning of marriage, spouses retain their respective estates
- Upon death of deceased, growth (accrual) in both estates to be
Only takes effect if donor dies calculated
- Spouse with smaller accrual has claim against the other with
No donations tax payable as this donation is specifically exempt higher for 50% the difference of their accruals
Property donated where no benefit is passed until the death of If estate of deceased has claim against surviving, accrual claim
the deceased included as deemed property, provided: deemed to be property
- donee didn’t gain any benefit under donation til the death of donor
- and it was exempt from donations tac in terms of s 56(1)(d) of the Claim deductible in calc for dutiable value of estate
Income Tax Act
iv. PROPERTY THAT DECEASED WAS COMPETENT TO DISPOSE OF FOR THEIR OWN BENEFIT
Property that deceased was competent to dispose of for their/their estate’s own benefit immediately prior to their death
PROPERTY SOLD
Price realised by sale (proceeds)
PROPERTY NOT SOLD
Fair market value of property at time of death
Value of “property” XX
Value of “deemed property” XX
GROSS ESTATE XXX
Less: Allowable deductions (XX)
NET ESTATE XXX
Less: Abatement/Rebate (R3 500 000)
DUTIABLE/TAXABLE AMOUNT XXX
ESTATE DUTY @ 20% XXX
Separate tax on transfer of wealth → Estate Duty Act no. 45 of 1955
Payable on net value of assets > R3,5 million
Liability of the deceased estate
Executor of a deceased estate is responsible for calculation & payment of
estate duty
World-wide assets: Ordinarily resident DECEASED ESTATE ADMINISTRATION PROCESS
Non-residents: SA assets
1. Interviews
If dutiable amount does not exceed R30 million → tax levied at 20%
2. Report estate
If dutiable amount exceeds R30 million → tax levied at 25%
3. Open files
4. Letters to creditors & debtors/advertisements
PROPERTY
5. Valuations
If ordinarily resident in SA = worldwide assets
If non-ordinarily resident = only SA assets 6. Income tax return
Owned at date of death 7. Estate bank account
1. Actual property owned by the deceased at the date of their death 8. Pay debts
(movable/ immovable, tangible/ intangible) + any right in or to such
property. Income earned by the deceased prior to death. 9. Prepare “Liquidation and Distribution Account”
2. Fiduciary interests owned by the deceased at date of death (limited 10. Pay Master’s fees + executor’s fees
interests)
11. Pay inheritances
3. Usufructuary interest held by the deceased at date of death
• usufruct 12. File estate as complete – finalisation
• bare dominium
4. Right to an annuity charged upon property held by the deceased
immediately prior their death
5. Any other right to an annuity enjoyed deceased immediately prior to their
death if it accrues to another person on their death
6. Contributions made by the deceased to a pension/provident or retirement
annuity fund, not allowed as a deduction/ exemption
, © Warona Lekoko, 2024
DEEMED PROPERTY
Property is NOT owned at date of death
Certain property items that didn’t exist at date of death but originated due to the death of deceased
i. DOMESTIC LIFE INSURANCE POLICIES
Proceeds from domestic insurance policy on the deceased’s life
Taken out on the life of the deceased
Pays to their beneficiary
‘Domestic policy’ = policy that pays out in SA upon the insured’s death
Policy proceeds can be reduced by amount of premiums paid by beneficiaries plus interest at 6%
If deceased was married in community of property, premiums paid would’ve paid out of joint estate
If surviving spouse is beneficiary, 50% of the premiums paid deemed to have been paid by surviving spouse
50% premiums paid + interest of 6% can be deducted from proceeds
EXCEPTIONS:
1. Proceeds payable to a surviving spouse/child of deceased under a duly registered antenuptial/postnuptial contract,
2. If proceeds are payable to a person who at date of deceased’s death was:
q Partner of deceased
q Co-shareholder in a company which deceased held shares
q Co-member of a close corporation with deceased…
provided that:
• deceased paid no premium and
• policy was taken out for the purpose of enabling that person to acquire the deceased’s share in the partnership, company or close
corporation
3. Except for above exemptions, where Commissioner is satisfied that:
♦ policy isn’t taken out by/at instruction of deceased
♦ no premiums were paid/borne by deceased
♦ no amount i.t.o. the policy is payable to deceased’s estate
♦ no amount is payable to/used for benefit of any relative/dependant or any family company of deceased
ii. DONATIO MORTIS CAUSA iii. ACCRUAL CLAIMS AGAINST SURVIVING SPOUSES
A donation in contemplation of death – donation made when Out of community, under accrual system:
donor anticipates death & donates specific asset - At beginning of marriage, spouses retain their respective estates
- Upon death of deceased, growth (accrual) in both estates to be
Only takes effect if donor dies calculated
- Spouse with smaller accrual has claim against the other with
No donations tax payable as this donation is specifically exempt higher for 50% the difference of their accruals
Property donated where no benefit is passed until the death of If estate of deceased has claim against surviving, accrual claim
the deceased included as deemed property, provided: deemed to be property
- donee didn’t gain any benefit under donation til the death of donor
- and it was exempt from donations tac in terms of s 56(1)(d) of the Claim deductible in calc for dutiable value of estate
Income Tax Act
iv. PROPERTY THAT DECEASED WAS COMPETENT TO DISPOSE OF FOR THEIR OWN BENEFIT
Property that deceased was competent to dispose of for their/their estate’s own benefit immediately prior to their death
PROPERTY SOLD
Price realised by sale (proceeds)
PROPERTY NOT SOLD
Fair market value of property at time of death
