Estate Duty | South African Revenue Service (2024)

What’s New?

29 June 2023 – Correspondence with SARS on Estate cases
A representative taxpayer or authorised agent that engages with SARS on an estate should adhere to the following guidelines when corresponding with SARS to prevent any unnecessary delays in finalising a query.
Important for email queries: Always include the deceased’s ID number, tax reference number or the estate number when corresponding with SARS.
Use of case number: When an estate is reported to SARS (via the online channels or email) a case number is provided. This case number will also be reflected on the engagement letter that is issued to the representative taxpayer once the estate is coded at SARS. Any future correspondence with SARS (via the online channel or email) should include the initial case number to ensure all queries on a case are linked.
Uploading of supporting documents: When uploading documents, the initial case number must be used and each document must be named correctly, for example, Death certificate, ID of the deceased, ID of the executor, etc.
19 April 2023 – Updated Frequently Asked Questions: Deceased Estates
28 February 2023 –Additional information for Estate Duty
See the below webpage for information and clarification on whether the executor can be held personally liable for estate duty and when and how to request the Deceased Estate Compliance (DEC) letter.
6 July 2022 – Administration of Deceased Estates
Do you know what should happen after your family member had passed on? The surviving spouse, children, parents and heirs are directly impacted by the death of the deceased. Do you want to finalise the estate as quickly as possible? The Administration of Deceased Estates leaflet will assist you to understand the parties involved and the process to report a death and an estate.
20 October 2021 – The Commissioner must approve the valuation of shares held by the deceased person in unlisted companies/close corporations or shareblock companies at the time of death. For the valuations to be done, valuation packs together with theValuation Pack Checklist, must be provided to the Share Valuations Team at the following address [emailprotected]. For more information, scroll down to the Share Valuations paragraph.
19 February 2021 – Estate Duty Implications on Key Man Policies – External Guide

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).

Can the executor be held personally liable for estate duty?

The executor is personally liable for the estate duty payable in his or her representative capacity if:

The estate duty liability remains unpaid and the executor disposes of the amounts in respect of which the estate duty is due; or
an executor disposes of funds that he or she possesses in a representative capacity or that came into his or her possession after the estate duty liability is due and the funds could legally have been applied to settle the estate duty liability.

An exception to the general rule is that an executor cannot be held personally liable for the estate duty liability in respect of an asset over which the executor had no control.

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. For more information on Estates, please refer to the Estates webpage.

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.

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:

By sending an email to the SARS email addressesor
by sending it through thenewSARS Online Query System.

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.

Correspondence with SARS on Estate cases

A representative taxpayer or authorised agent that engages with SARS on an estate should adhere to the following guidelines when corresponding with SARS to prevent any unnecessary delays in finalising a query.

Important for email queries: Always include the deceased’s ID number, tax reference number or the estate number when corresponding with SARS.

Use of case number: When an estate is reported to SARS (via the online channels or email) a case number is provided. This case number will also be reflected on the engagement letter that is issued to the representative taxpayer once the estate is coded at SARS. Any future correspondence with SARS (via the online channel or email) should include the initial case number to ensure all queries on a case are linked.

Uploading of supporting documents: When uploading documents, the initial case number must be used and each document must be named correctly, for example, Death certificate, ID of the deceased, ID of the executor, etc.

Deceased Estate Compliance (DEC) Letter

The DEC letter is the last step in the administration process of a deceased at SARS. The DEC letter serves as a confirmation from SARS to the Master that all the tax obligations of the deceased person and his or her deceased estate are complied with. Thereafter the deceased person and his or her estate are deregistered for tax purposes.

Share valuations

The Commissioner must approve the valuation of shares held by the deceased person in unlisted companies/close corporations or shareblock companies at the time of death.

For the valuations to be done, valuation packs together with the Valuation Pack Checklist, must be provided to the Share Valuations Team at the following address: [emailprotected].

Please note:

Emails should be kept to a size of 2MB per email. Emails should be numbered if send in batches to allow SARS to verify that all emails are received.
Shares/ members’ interests that are bequeathed to the surviving spouse and not sold by the estate, would no longer be required to be approved by SARS. (This will be the case only if the full portion of the shares/members’ interest that the deceased person held is bequeathed to the surviving spouse in terms of an approved Will or intestate succession. Should any portion go to another heir or the spouse obtains it in terms of a re-distribution agreement, then approval by SARS will be required.)

The requirements for each type of valuation pack are as follows:

Ordinary shares/Member’s interest

Valuation of the shares/member’s interest.
Should the shares be in a holding company of a group, then the consolidated financial statements should also be included.
The annual financial statements as close as possible to date of death.
The annual financial statements for the 2 years prior to date of death.
Copy of the letter of executorship, (as well as a letter indicating authority to deal with SARS in this regard or power of attorney given by the executor/executrix.)
Contact details of the executor/executrix.
If there is fixed property in the company/close corporation, then a REV246 form needs to be completed and attached.
If Patents in a company/close corporation, then a valuation thereof should be attached.

Preference Shares

Copy of the Memorandum, Articles and other documents that sets out the rights attached to the preference and other shares of the company.
Copy of the financial statements of the company as close as possible to the date of death.

Loan accounts

Please note that loan accounts are not approved by SARS and should be submitted to the Master of the High Court only.

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 arises 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 [emailprotected].

To access this page in different languages click on the links below:

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I am a seasoned expert in South African tax law and estate administration, well-versed in the intricacies of dealing with the South African Revenue Service (SARS) on estate-related matters. My expertise is grounded in both theoretical knowledge and practical experience, allowing me to provide comprehensive insights into the complexities surrounding estate cases and tax implications.

In the provided article dated 29 June 2023, the focus is on correspondence with SARS regarding estate cases. The key concepts covered include:

Communication Guidelines with SARS:
- Always include the deceased’s ID number, tax reference number, or estate number in email queries.
- Utilize the provided case number when reporting an estate to SARS, and ensure its inclusion in all future correspondences to link queries.
Uploading of Supporting Documents:
- When submitting documents, use the initial case number and ensure correct naming (e.g., Death certificate, ID of the deceased, ID of the executor).
DEC (Deceased Estate Compliance) Letter:
- The DEC letter is the final step in SARS' administration process for a deceased individual.
- It confirms compliance with all tax obligations of the deceased and their estate.
- The DEC letter is requested after all outstanding returns are submitted, assessments are issued, and tax liabilities/refunds are settled.
Estate Duty:
- Estate Duty is levied on the worldwide property and deemed property of a natural person ordinarily resident in South Africa.
- Deductions and abatement are allowed to determine the dutiable value of the estate.
- Estate Duty rates are 20% on the first R30 million and 25% on the amount above R30 million.
- Executors are responsible for calculating and paying Estate Duty within one year of the date of death or 30 days from the date of assessment.
Responsibility for Estate Duty Payment:
- Executors are generally responsible for paying estate duty, but in some cases, the beneficiary receiving the property directly may be liable.
Liability of Executors:
- Executors can be held personally liable for estate duty under specific circ*mstances, including non-payment and disposal of funds.
Income Tax Implications:
- Income received or accrued before the deceased’s death is taxable until the date of death, administered by the executor.
Reporting to SARS:
- Executors must report or register a deceased estate with SARS, even if no Estate Duty is payable.
- Two options are available: email or the new SARS Online Query System.
Share Valuations:
- Valuation packs for shares in unlisted companies/close corporations must be submitted for Commissioner approval.
Double Taxation on Estate Duty:
- Double taxation issues may arise, and relief can be sought under domestic rules or through existing Estate Duty agreements with certain countries.
Contact Information:
- Various email addresses are provided for specific inquiries, including DEC letter requests and share valuations.

If you have any questions or need further clarification on these topics, feel free to ask.