As the saying goes, the only certainties in life are death and taxes, so it’s best to be prepared for both. What do you need to know about deceased estates, estate tax and inheritance in South Africa? Let’s take a look at some of the most important facts and tips, and answer some of the most frequently asked questions about deceased estates in South Africa so you know what to expect when a loved one passes.
What happens when a person dies?
Upon the death of an individual taxpayer, all their assets are placed in an estate. This is known as a ‘deceased estate’. Assets in a deceased estate can include immovable property and movable property or money in the bank. This estate is administered by an executor. Once the executor has completed all the administration in the deceased estate and all of the deceased’s debt has been paid, the remaining assets are distributed to the beneficiaries, once the South African Revenue Service is satisfied that the estate duty has been paid and the deceased estate is compliant with all tax requirements. The deceased estate must be reported to the South African Revenue Service so that estate duty can be collected.
How to register a deceased estate on eFiling
Steps to register a Deceased Estate
The deceased individual must be registered and coded by SARS as a Deceased Estate before being registered for income tax.
- This registration of a deceased estate can be done at a SARS branch or using eFiling.
- SARS issues a new number to the deceased estate which they link to the existing income tax reference number belonging to the deceased individual.
The executor must request the registration of the deceased estate as soon as there is income after the death date (bearing in mind exclusions and exceptions).
Tip: The deceased person’s tax reference number does not need to be deactivated at SARS before a deceased estate may be registered.
- Their tax reference number must simply be coded as a Deceased Estate on the SARS system before a deceased estate can be registered.
Where an executor has not registered a deceased estate, a SARS auditor can register the deceased estate during the audit of the deceased person. This usually happens when the auditor determines that there is qualifying taxable income after the death date, in the Income and Expenditure Account which warrants the registration of a deceased estate.
What documents do you need in order to get a tax clearance certificate for a deceased estate in South Africa?
- Death certificate
- Letter of executorship
- Certified copy of the executor’s ID
- Proof of the physical address and contact details of the executor
- Power of Attorney (if applicable)
- Liquidation and Distribution account
How long does it take to settle/finalise a deceased estate in South Africa?
Once an executor is appointed, the average turnaround time in relation to the deceased estate’s administration can be between 6 and 13 months (sometimes longer), depending on the specific details and complexity of the estate.
What is a Rev 267 form?
This is the Estate Duty return that must be completed by the executor and submitted to the Master of the High Court’s office where the estate is registered. This form must be accompanied by a copy of the liquidation and distribution account, which will be used by the Master to assess the Estate Duty payable.
What tax is charged on a deceased estate?
This kind of tax is known as ‘estate duty’. It is charged on the worldwide property and deemed property belonging to South African tax residents and on the South African property belonging to non-residents.
- Various deductions in terms of section 4 of the Estate Duty Act will determine the net value of the estate.
- The Estate Duty is charged on the dutiable value of an estate at a rate of 20% on the first R30 million, and then at a rate of 25% on the dutiable value above R30 million. The first R3,5m are however exempt from estate tax.
What is the estate duty surviving spouse exemption in South Africa?
When one spouse dies, estate duty is not payable on any asset left to the remaining spouse. In the same vein, Capital Gains Tax is not payable on the disposal of an asset from one spouse to another.
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