The basics of estate duty

When a person dies, they leave behind an estate which includes everything they own. Estate Duty is payable on the estate of every person who dies and whose nett estate is in excess of R3,5 million. It is charged at the rate of 20%. Currently, SARS is responsible for collecting the Estate Duty of a deceased person.

How does an estate get reported to SARS?

Even if Estate Duty does not apply to you, it is still necessary to inform SARS that the person is deceased. It is recommended that you consult with a legal expert when going through such as process.

Copies of the following documents must be sent to SARS:

• Death certificate or death notice.
• Identity document of the deceased.
• Letters of Executorship (J238) (if applicable).
• Letter of Authority (J170) (in cases where the estate is less than R250 000).
• Certified copy of the executor’s identity document.
• Power of attorney (if applicable).
• The name, address and contact details of the executor or agent.
• The last Will and Testament of the deceased.
• An inventory of the deceased’s assets.
• The liquidation and distribution accounts (if available).

These documents may be sent to the relevant Centralised Processing Centres that is closest to the Master of the High Court where the estate is being administered.

How does Estate Duty work in relation to an inheritance?

All income received or accrued before the deceased’s death is taxable in the hands of the deceased up until the date of death, and will be administered by the executor or administrator acting as the deceased’s representative taxpayer.

• After the date of death of a person, a new taxable entity comes into existence - the “estate”.
• The assets of the deceased will be held by the 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.
   

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

• http://www.sars.gov.za/TaxTypes/EstateDuty/Pages/default.aspx
• http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Tax-and-Inheritance.aspx